"An Upward Redistribution of Income, not an Improving Economy Explains the Drop in the Deficit"

[applegrove]

An Upward Redistribution of Income, not an Improving Economy Explains the Drop in the Deficit

http://www.cepr.net/index.php/blogs/beat-the-press/an-upward-redistribution-of-income-not-an-improving-economy-explains-the-drop-in-the-deficit

"SNIP......................................


"Since then [January, 2011], a series of budget deals — and an improving economy — have dramatically slowed federal borrowing. On Wednesday, the White House budget office announced that the government recorded a $680­ billion deficit in the fiscal year that ended in September, less than half the size of the shortfall President Obama inherited in 2009 when measured as a percentage of the economy."

Actually, the sharp drop in the deficit cannot be explained by economic growth over the last three years. In January of 2011, the Congressional Budget Office projected year over year growth for 2011, 2012, and 2013 of 2.7 percent, 3.1 percent, and 3.1 percent, respectively. In fact growth was 1.8 percent in 2011, and 2.8 percent in 2012. We don't yet have full year data for 2013, but GDP growth is virtually certain to be under 2.0 percent.

Since the economy has grown considerably slower than was predicted, growth cannot explain the lower than projected deficits. The explanation instead is the cuts made to the budget, as well as the ending of the Bush tax cuts for high income households. The upward redistribution of income, along with the sharp rise in the stock market, has also increased revenue.

This impact shows up not just as additional capital gains taxes, but also as a result of capital gains income being recorded as normal income. This happens every time there is a sharp increase in asset values. Growth in national income has exceeded growth in output by almost 1.5 percentage points since 2010, which is the sort of gap that would be expected given the sharp rise in the stock market over this period.



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[pscot]

1. Ev'ry way you look at it you lose.

[applegrove]

2. Americans need to demand that they share in the success

of their corporations.....how.....I don't quite know.....I think the GOP has been stupid to make tax reform wait as long as it has.......because I feel a wake up occurring ..........and that a discussion needs to happen on corporations and productivity and robots and how the vast majority of people are going to benefit from that.

[Scuba]

3. Boy oh boy, wait 'til Senator Plagarism hears about this!!!

PAUL: No, the size of growth of government is enormous under President Obama.

http://thinkprogress.org/economy/2012/09/09/816761/flabbergasted-rand-paul-learns-public-employment-decreased-under-obama/

[xchrom]

4. du rec.

[woo me with science]

5. K&R By design. nt