Relevant and even prescient commentary on news, politics and the economy.

Here we go again and again!

Rjs sends a link filled note on the ongoing federal financial merry go round:

It’s been a pretty slow week, with neither major monthly economic reports nor widespread kerfuffles in the blogosphere…as we figured, all the budget proposals floated earlier this year have gone nowhere, and it now appears that the republicans wont negotiate on any compromise until they have the democrats and the president and backed up against the debt ceiling…in case you forgot, the artificial federal debt limit is set to kick back into effect a week from now, on May 19th, after a three-month hiatus…according to the inane deal negotiated with the tea party contingent in late January, the debt ceiling was suspended until that date so the anti-everything crowd would not be on record as having raised it; then, on May 19th, the new debt ceiling will suddenly become whatever amount of script the Treasury has outstanding at that time, effectively forcing the government immediately into accounting legerdemain to run the show while the clock runs out…estimates were that would be by mid August, but with revenues now higher than expected, it could be stretched till early September or even October, around the same time the stop gap continuing resolution to fund government functions expires, September 30th, at the end of the fiscal year…

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History Lesson – Deficits as a % of GDP, Tax Rates

Reader Matthew McOsker writes more on the deficit:

History Lesson – Deficits as a % of GDP, Tax Rates

DISCLAIMER: This is not a defense of Bush II. Just the facts on the deficit, and a further discussion of sectoral balances and some tax rate info.

Let’s look at some history, because the belief is that Bush II ran the biggest budget deficits ever, and ruined the Clinton surpluses. I wish we did not spend so much on the military under Bush. However, the Bush deficits were not that large as a % of GDP. His father, and Reagan ran bigger ones. The deficits were not that far off where we were at the end of the 70’s either. Now keep in mind, that the trade deficit does factor in – been having trouble assembling historical data on this. When running a trade deficit we need to run a federal deficit to keep the private sector in balance.
See Credit write downs  on sectoral balances:

The key formulas is as follows:

Domestic Private Balance + Domestic Government Balance + Foreign Balance = 0
Via Business Insider L Randall Wray

Lastly, the Obama deficits are exactly what we needed to make up for the deficits that were probably too small under Clinton and Bush II.

Now, much of the talk on historical Tax Rates focuses on marginal rates- I found this table to be quite interesting as it looks beyond the top marginal rates, and breaks out lower income folks.

Data is for 3 groups 1/2 median income; Median Income ; Twice Median income respectively

Year — Average Combined Rates for each group that includes payroll taxes and EITC , and the last numbers are the top and bottom marginal rates that excludes payroll taxes ( I just sampled a few years, go to the link to see more. I used average cause that better reflects what one actually pays) :

1970 — 9.45% — 12.7%   — 15.15% — 14% and 70% Nixon
1979 — 11.24% — 16.97% — 20.32% — 14% and 70% Carter
1982 — 13.21% — 17.76% — 21.94% — 12% and 50% Reagan
1990 — 12.77% — 16.98% — 19.83% — 15% and 28% Bush I
1992 — 12.2%   — 16.83% — 20.13% — 15% and 31% Bush I
2002 — 5.42%   — 14.18% — 19.83% — 10% and 38.6% Bush II as Clinton Rates still in effect
2003 — 3.45%   — 12.99% — 18.05% — 10% and 35% Bush II

From Tax Policy Center

Chart 1

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