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US budget deficit running 6.2 percent higher than last year

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US budget deficit running 6.2 percent higher than last year
Feb 11, 4:49 PM (ET)
By MARTIN CRUTSINGER

WASHINGTON (AP) — The federal government ran a bigger deficit in January, pushing the imbalance so far this budget year up 6.2 percent from the same period a year ago.

The Treasury Department said Wednesday the deficit for January stood at $17.5 billion compared to $10.3 billion a year ago. For the first four months of the budget year that began in October, the deficit widened to $194.2 billion from $182.8 billion during the same period last year.

The budget deficit has gradually narrowed since 2012, which was the fourth straight year in which it topped the $1 trillion mark. The improvement reflects the country’s economic recovery from recession. The government is seeing higher tax revenues as people go back to work and smaller payments for safety-net programs such as unemployment assistance. It also represents efforts by Congress to control deficits through higher taxes and across-the-board spending cuts.

Last year’s deficit benefited from a $24 billion special payment Freddie Mac made for the support it received during the financial crisis. The Congressional Budget Office forecasts a deficit of $468 billion for the full 2015 budget year, 3.1 percent lower than in 2014.

For the current budget year, government revenues total $1.05 trillion, an increase of 8.7 percent from the same period a year ago. Government spending totals $1.24 trillion, up 8.3 percent over last year.

The deficit in 2014 narrowed to $483.3 billion from $680.2 billion in 2013. Before that, the deficits soared to record heights as the government grappled with revenue losses from the Great Recession and increased spending in such areas as unemployment benefits and food stamps.

President Barack Obama unveiled last week his new budget proposal, which projects the 2015 deficit to rise to $583 billion, sharply higher than the CBO’s latest estimate. Obama’s new budget is asking Congress for authorization to spend $4 trillion next year and projects a 2016 deficit of $474 billion.

https://apnews.myway.com/article/20150211/us–budget_deficit-503db25ece.html

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Obama Wants to Hike Corporate Taxes to Pay For Infrastructure. Here’s Why That’s a Bad Idea.

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Obama Wants to Hike Corporate Taxes to Pay For Infrastructure. Here’s Why That’s a Bad Idea.

Curtis Dubay / @CurtisDubay / Emily Goff / February 02, 2015

It is fitting that President Obama released his 2016 budget on Groundhog’s Day. Like Bill Murray’s character Phil Connors in the famous movie Obama is stuck in an endless loop where he keeps pushing economically destructive tax hikes that have little chance of becoming law.

This is the seventh budget he has released, and each of them had trillions of dollars of tax hikes that would needlessly increase the tax burden on American families and increase the already bloated size of the federal government.

This year’s headline-grabbing and nonsensical tax hike targets U.S. multinational businesses. Obama wants to apply a 19 percent minimum tax on their foreign income going forward and a 14 percent tax on the foreign income they previously earned but have not yet returned to the U.S. (and therefore have not paid their U.S. tax on yet).

Businesses would have to pay the minimum tax each year. Thus, it would end the long practice of deferral, which applies extra U.S. tax to foreign earnings only when businesses return those profits home. It is unclear from the text of the budget if businesses could continue to use their foreign tax credits, or if the minimum tax would apply on top of the foreign tax businesses already pay. Either way, ending deferral and raising taxes on foreign income will reduce investment by U.S. business both abroad and here at home. The result will be fewer jobs and lower wages for U.S. workers.

This tax hike is so perplexing because the U.S. already has the worst corporate tax system in the developed world. We have the highest rate, 15 percentage points above the average of our competitors, and we are effectively the only nation in that group that taxes the foreign income of our businesses.

We should be lowering the corporate tax rate and moving to a territorial system that would not tax overseas earnings to put our businesses back on competitive footing. However, by raising rates on the foreign income of our businesses, Obama’s proposal goes in the exact opposite direction.

This is an especially alarming development because corporate tax reform was supposed to be one area of potential compromise between Obama and the new Congress. Obama has said he is interested in doing it and even has a framework of a plan. These new proposals reduce the already slim chances of advancing much-needed reform.

This tax hike is so perplexing because the U.S. already has the worst corporate tax system in the developed world. We have the highest rate, 15 percentage points above the average of our competitors, and we are effectively the only nation in that group that taxes the foreign income of our businesses.

We should be lowering the corporate tax rate and moving to a territorial system that would not tax overseas earnings to put our businesses back on competitive footing. However, by raising rates on the foreign income of our businesses, Obama’s proposal goes in the exact opposite direction.

This is an especially alarming development because corporate tax reform was supposed to be one area of potential compromise between Obama and the new Congress. Obama has said he is interested in doing it and even has a framework of a plan. These new proposals reduce the already slim chances of advancing much-needed reform.

Obama is sure to argue that the policies he is proposing are similar to ones proposed by Republicans, such as in former Chairman of the House Ways and Means Committee Dave Camp’s tax reform proposal last year. However, like in many of the president’s policies, the context matters immensely.

Camp’s proposal was part of a tax reform plan that established a territorial tax system. As part of that system, anti-base erosion and profit shifting (BEPS) policies are necessary to stop U.S. businesses from shifting too much U.S. income abroad. Obama proposing BEPS policies without simultaneously moving to a territorial regime is like trying to install a security system on a house that has not been built yet.

The president is also likely to argue that his tax on unrepatriated earning is a tax cut, since he would apply a lower rate to them than under current law. This is nonsense. By deeming the money repatriated and forcing businesses to pay tax on it, he is forcing businesses to pay tax on money they never intended to bring back to the U.S. and therefore would never have paid tax on.

The tax hike on multinationals is supposed to pay for half of a six-year, $478 billion highway and transit program reauthorization proposal. Obama wants to dramatically increase spending on underutilized mass transit rail systems and federal grants to local rail, road and port projects. Concentrating transportation decision-making in Washington is the wrong way to go; states, localities and the private sector know the mobility needs and consumer preferences on the ground. Obama’s proposal would give them less control over their transportation funding and spending when they need more.

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Garrett: Obama’s Budget is a Lousy Groundhog Day Repeat

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Garrett: Obama’s Budget is a Lousy Groundhog Day Repeat

“It’s fitting that President Obama released his budget on Groundhog Day because it’s a painful repeat of the same failed policies that he has presented to Congress for the past six years. This budget increases taxes, expands failed government programs that do nothing to create jobs, and never balances.” Rep Scott Garrett

Garrett: Obama’s Budget is a Lousy Groundhog Day Repeat
Feb 2, 2015

WASHINGTON, D.C. – Rep. Scott Garrett (NJ-05), a senior member of the House Budget Committee, released the following statement after President Obama unveiled his Fiscal Year 2016 budget proposal to Congress today:

“It’s fitting that President Obama released his budget on Groundhog Day because it’s a painful repeat of the same failed policies that he has presented to Congress for the past six years.  This budget increases taxes, expands failed government programs that do nothing to create jobs, and never balances.

“When I talk to hardworking taxpayers in New Jersey, I always hear the same thing—American families are learning to do more with less, so it’s time for Washington to do the same.  Mr. President, please join us to work on solutions that make the government more efficient, accountable, and effective.”

Key Facts: The President’s FY 2016 Budget

Tax Increases
• Despite $2.1 trillion in new tax increases, President Obama’s budget never balances—ever.
• Major proposed tax increases include higher levies on savings and investment, small businesses, and increases in the costs of hiring workers.
• These tax hikes would stunt the economic growth needed to get Americans back to work, and come on top of $1.7 trillion in tax hikes already imposed by this Administration.

Spending Increases
• The President’s budget increases annually-appropriated spending for next year by $74 billion relative to current law. Over 5 years, he would increase such spending by $322 billion.
• Next year alone, the President’s budget would grow total federal spending by $259 billion, or 7 percent.
• Total spending will increase by 65 percent ($2.4 trillion) in 10 years under the President’s plan.

Interest Costs Skyrocket
• President Obama’s plan more than triples interest costs, which remain the fastest growing item in the budget.
• Interest on the debt this year would be $229 billion, but would rise to $785 billion in 2025 under his plan.
• At the end of President’s plan, annual interest costs would be larger than his proposed spending for national defense, Medicaid or the combined total of all non-defense agency spending.

Debt Climbs
• Since 2009, we’ve added $7.5 trillion to the debt and spent $21.1 trillion.
• The President’s budget plan would add $8.5 trillion to the debt.
• Cumulative deficits would amount to $5.7 trillion, and gross debt would climb to $26.3 trillion in 2025.

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Keynesians Are In Hysterics Because Their Funny-Money Experiment Is Coming To An End

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Keynesians Are In Hysterics Because Their Funny-Money Experiment Is Coming To An End\

At the Washington Post’s “Wonkblog,” Matt O’Brien wrote a typical sort of hysterical screed about the gold standard system – the system that the United States used for nearly two centuries, until 1971. During that time, the country went from a handful of rebellious subsistence farmers, worn down by over a decade of war, hyperinflation and unstable government, to the most successful and wealthiest country in the world.

Think about that.

Now, let’s see what O’Brien wrote:

“When it comes to crackpot economic ideas, the gold standard is, well, the gold standard.

It’s a barbarous relic that has nothing to recommend it today. Pegging the dollar to the price of gold, you see, is just a doomsday device for turning recessions into depressions.”

To me, even without getting into any details, this smacks of a certain lack of connection with any fact of reality or history. You just don’t become the most successful country of the last two centuries with a “crackpot” monetary system that is a “doomsday device.”

The last twenty years of the U.S.’s gold standard era – the Bretton Woods years when the dollar was worth 1/35th of an ounce of gold – were times of prosperity and abundance, especially for the U.S. middle class. The gold standard era didn’t end in 1971 because it was producing bad results, and people decided it was time to find something better. It ended because those responsible for maintaining it were idiots.

I would even say that those years, the 1950s and 1960s, were the best of the last century, 1914-2014.

If the gold standard system is so horrible, then how did that happen?

Since 1971, even by the U.S. government’s falsely sunny statistics, the U.S. “real” median full-time male income has gone nowhere.

https://www.forbes.com/sites/nathanlewis/2014/10/30/the-keynesians-are-in-hysterics-because-their-funny-money-experiment-is-coming-to-an-end/

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Geneva Report warns record debt and slow growth point to crisis

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Geneva Report warns record debt and slow growth point to crisis

By Chris Giles, Economics Editor

A “poisonous combination” of record debt and slowing growth suggest the global economy could be heading for another crisis, a hard-hitting report will warn on Monday.

The 16th annual Geneva Report, commissioned by the International Centre for Monetary and Banking Studies and written by a panel of senior economists including three former senior central bankers, predicts interest rates across the world will have to stay low for a “very, very long” time to enable households, companies and governments to service their debts and avoid another crash.

The warning, before the International Monetary Fund’s annual meeting in Washington next week, comes amid growing concern that a weakening global recovery is coinciding with the possibility that the US Federal Reserve will begin to raise interest rates within a year.

https://www.ft.com/intl/cms/s/0/4df99d28-4590-11e4-ab10-00144feabdc0.html#axzz3EgyeJ6zn