Tuesday, July 12, 2005

Fiscal Year 2005 July 7, 2005
A Congressional Budget Office Analysis

The Report seems far too complacent to this Author, when reviewing the numbers. Outlays increase year over year at over 7%, almost equally distributed between Defense and nonDefense. The good Budget revenues rely on Corporate income tax payments, made under the Bush exemption, so Corporations could bring their money back into the Country at one-third the Tax rate--tax payments which will not be repeated. The nonWithheld Quarterly payments by Individuals increased by $8 bn, but such tax revenues depend on solid economic performance unaffected by increasing Energy pricing. Actual Withheld tax payments from Labor seem partially unclear, but this Author expects they are actually down with the Tax law alterations.

Agriculture, Education, and Homeland Security each increased outlays by 20% year over year. Net Interest on the Public debt was the greatest percentage outlay increase at 14.5%. Social Security payments grew at a rate of 5.4%, O.9% higher than in Y2004. Medicare payments rise at 10.1% this year, 1.6% higher than Y2004. Medicaid payments are about 8% higher year over year, eliminating temporary payments assumptions made by the Federal Government in Y2004.

CBO estimates that the government recorded a deficit of
$251 billion for the first three-quarters of fiscal year 2005.
Receipts were about $204 billion, or 14.6 percent, higher
than in the same nine months last year, and outlays were
about $128 billion, or 7.4 percent, higher.

Letting the Bush Tax Cuts lapse seems the only method to maintain current tax revenues throughout the next decade. Federal Spending is increasing at twice the projected rate of Inflation, in excess of the projected economic growth rate, and tax revenues are bound to go down without alteration of the Federal Tax Code. We need Tax revision, not Tax Cuts. lgl

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