lawgator1
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This is not about the debate over the budget, its about the numbers underlying the projected revenues and deficits.
One of the things I really love about my new car is that I got satellite radio. There is a channel called POTUS and it is basically C-span on the radio, with some commentary programs thrown in.
They had on this morning as I ran some errands some conferences by the budget people about the every day practice of running the budget, projecting tax revenues, forecasting economic conditions. This stuff gets way past the bravado of each side's rhetoric and was very interesting.
A couple of things really stuck out for me. One, the projected GDP growth. This is used to forecast tax revenues.
Typically, over a five year period post recession, the GDP grows at an average of 4.2 percent. The government is using a lower number of 3.8 percent average over the next five years, with a number like 2.7 this year, climbing steadily over time to that 3.8 average.
Next, all of the projections about growth and tax revenue had to be completed in October/November in order to have time to run all the numbers. They go off of the tax structure at the time, which means that the forecasts now are going to be different in six months when they do their mid-year recalculations.
Last, the unemployment number they are working off is 9.7 percent, while the most recent number they cite is 9.0 percent. Not sure where they are getting 9.0 percent, but they said they temper that with seasonal adjustments anyway. Just thought it was interesting that the assumption is worse than reality for purposes of this exercise.
There was then a discussion with the host of the show and some economics professor they use who was going through the budget. Apparently, over the next 10 years, the interest on the debt will be $5 trillion. Now, in the next five, its $2 trillion. So there is a premium to be had in cutting the deficit quickly, while not falling far behind other countries in the areas that allow us to compete best, like education and technology.
On a side note, there was some commentary about how the WH and the GOP are headed for a fight over the National Institute of Health. Apparently, the most recent GOP plan cuts their funding by a billion, while Obama's budget would increase it by a billion. This is money that goes to cancer research and I am sure this is one of those things that just ends up not changing when all is said and done.
I once worked with the Florida Legislature and I've seen this ploy before. Neither side really wants to cut or increase spending, but both sides put out an initial plan to do one or the other. When they compromise with rearranging some dollars but leaving it effectively untouched, they both claim credit for thwarting the other side. It is in many respects a wink and a nod a charade by both.
One of the things I really love about my new car is that I got satellite radio. There is a channel called POTUS and it is basically C-span on the radio, with some commentary programs thrown in.
They had on this morning as I ran some errands some conferences by the budget people about the every day practice of running the budget, projecting tax revenues, forecasting economic conditions. This stuff gets way past the bravado of each side's rhetoric and was very interesting.
A couple of things really stuck out for me. One, the projected GDP growth. This is used to forecast tax revenues.
Typically, over a five year period post recession, the GDP grows at an average of 4.2 percent. The government is using a lower number of 3.8 percent average over the next five years, with a number like 2.7 this year, climbing steadily over time to that 3.8 average.
Next, all of the projections about growth and tax revenue had to be completed in October/November in order to have time to run all the numbers. They go off of the tax structure at the time, which means that the forecasts now are going to be different in six months when they do their mid-year recalculations.
Last, the unemployment number they are working off is 9.7 percent, while the most recent number they cite is 9.0 percent. Not sure where they are getting 9.0 percent, but they said they temper that with seasonal adjustments anyway. Just thought it was interesting that the assumption is worse than reality for purposes of this exercise.
There was then a discussion with the host of the show and some economics professor they use who was going through the budget. Apparently, over the next 10 years, the interest on the debt will be $5 trillion. Now, in the next five, its $2 trillion. So there is a premium to be had in cutting the deficit quickly, while not falling far behind other countries in the areas that allow us to compete best, like education and technology.
On a side note, there was some commentary about how the WH and the GOP are headed for a fight over the National Institute of Health. Apparently, the most recent GOP plan cuts their funding by a billion, while Obama's budget would increase it by a billion. This is money that goes to cancer research and I am sure this is one of those things that just ends up not changing when all is said and done.
I once worked with the Florida Legislature and I've seen this ploy before. Neither side really wants to cut or increase spending, but both sides put out an initial plan to do one or the other. When they compromise with rearranging some dollars but leaving it effectively untouched, they both claim credit for thwarting the other side. It is in many respects a wink and a nod a charade by both.
