In Case You Were Wondering

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I am as upset about high deficits as anyone, but I have also been hopeful that some control would be taken on them.

Remember last year when the Democrats kept saying the deficits would continue to increase? The current projection has dropped yet again, down to $314b, $100b lower than last year's deficit (a record, if left unadjusted for inflation) of $412b.

That's a $100b reduction. In a single year.

Bush's much-derided projection from a couple of years ago to get down to a $260b deficit by 2009 doesn't seem so crazy anymore.

Note also that the decreases in the deficit are mostly due to increases in revenue (not cuts in spending), which are primarily due to more people working, the positive trend of which largely coinicides with the Bush tax cut of 2003. Just sayin'.

Of course, you can't always decrease taxes to increase tax receipts. That sometimes works, as it seems to have done this time. However, that doesn't mean it would work again; but it does seem likely that increasing taxes from their current levels (which is what many Democrats want to do) would cause people to lose jobs, and they will have a tough time explaining this to their constituents if they do try to increase taxes.

Not that this is all good news: as I noted, spending is not being cut, and this threatens to gloss over the increasing problem of a large federal government, as it did in the late 90s, when government increased in size and we still saw budget surpluses.

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This page contains a single entry by pudge published on August 15, 2005 7:14 PM.

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