US Budget Deficit down by 20%, still high

[Tender Branson]

WASHINGTON (MarketWatch) — The U.S. government began fiscal year 2011 in the red, posting a budget deficit of $140 billion in October, the Treasury Department reported Wednesday.

The monthly red ink was down 20% from a year ago, but was still the third highest deficit for October on record. A year ago in October, the deficit hit $176 billion, the record high for the month.

Receipts were $146 billion in October, the Treasury said in its monthly budget report, while the government spent $286 billion in the month.



The budget data is likely to be seized on by congressional Republicans, who overtook the House of Representatives in this month’s midterm elections after pledging to rein in government spending.

House Republicans are aiming to roll back spending to 2008 levels, chopping funds that don’t affect the military or seniors and saving $100 billion in one year.

But this year’s improved figure isn’t likely to placate newly elected Republican lawmakers — or the White House. A commission set up by President Barack Obama to explore ways to reduce the deficit is due to report its findings early next month.

A draft proposal from the commission’s co-chairs released Wednesday recommends up to $200 billion a year in domestic and military spending cuts, as well as raising the U.S. retirement age to 68 from 67, among other recommendations.

http://www.marketwatch.com/story/us-fiscal-year-began-with-140-bln-deficit-2010-11-10?reflink=MW_news_stmp

[Tender Branson]

Deficit Panel Eyes Deep Social Security Cuts

Proposal from Leaders of President's Bipartisan Commission May Not Win Support of the Entire Panel

The leaders of President Barack Obama's bipartisan deficit commission launched a daring assault on mushrooming federal deficits on Wednesday, proposing reducing annual cost-of-living increases for Social Security, gradually raising the retirement age to 69 and taking aim at popular tax breaks such as the mortgage interest deduction.

As part of a proposal to wrestle $1-trillion-plus deficits under control, their plan would also curb the growth of Medicare. It came a week after voters put Republicans back in charge of the House and told Washington that the government is too big.

CBS News Chief White House Correspondent Chip Reid reports that in the 50-page draft proposal, pain is everywhere:

• The federal workforce would be slashed by 10 percent, or 200,000 jobs;
• More than $100 billion in defense cuts;
• Farm subsidies cut by $3 billion per year.

On Social Security benefits would be reduced for higher incomes and the retirement age would gradually increase from 67 to 69.

Some taxes would be cut, including tax rates for the highest bracket of 35 percent could go as low as 23 percent. Corporate rates would go from 35 percent to as low as 26 percent. The alternative minimum tax intended for upper tax brackets and now hitting the middle class families would be eliminated.

However, the plan by Chairman Erskine Bowles and former Sen. Alan Simpson, the co-chairman, doesn't look like it can win the support from 14 commission members that is needed to force a debate in Congress. Bowles is a Democrat and was former President Bill Clinton's White House chief of staff. Simpson is a Wyoming Republican.

The two were among the first to acknowledge their plan's unpopularity - and to suggest it would be a nonstarter in Congress.

"We'll both be in a witness protection program when this is all over, so look us up," Simpson quipped to reporters. Bowles said: "We're not asking anybody to vote for this plan. This is a starting point."

The White House reserved judgment. "The president will wait until the bipartisan fiscal commission finishes its work before commenting," said White House spokesman Bill Burton. Burton called the proposals "only a step in the process." He said Obama respects the panel's challenging assignment "and he wants to give them space to work on it."

The proposals were floated as the Treasury Department reported that the federal government began the new budget year with a deficit in October that totaled $140.4 billion -- down 20 percent from a year ago but still the third highest October shortfall on record. Even with the improvement, last month's red ink set the stage for what is expected to be a third consecutive year of $1 trillion-plus deficits.

The commission is supposed to report a deficit-cutting plan on Dec. 1, but panel members are unsure at best whether they'll be able to agree on anything approaching Obama's goal of cutting the deficit to about 3 percent of the size of the gross domestic product.

Building the needed support of 14 of its 18 members will be difficult. Cuts to Social Security and Medicare are making some liberals on the panel recoil. And conservative Republicans are having difficulty with the options suggested for raising taxes. The plan also calls for cuts in farm subsidies, foreign aid and the Pentagon's budget.

Story continues ...

http://www.cbsnews.com/stories/2010/11/10/politics/main7041460.shtml?tag=cbsnewsLeadStoriesAreaMain

[Southern Senator North Carolina Yankee]

And it shouldn't placate anybody at all, the deficit is still far to high.

The cuts the military are a little high, maybe $50-$75 Billion but the cuts have to be across the board and include defence. Cuts in farm subsidies, federal workers, foreing aid and I beleive there is a freeze in salaries as well, are all great ideas.  I like the increase in retirement age, but you have to be 25 or younger to be impacted by the Social Security age hike.

The tax code changes are also good, cleaning up and simplifying the tax code, reducing corporate tax rates, and removing the alternative minimum tax. 

The targets are a too high, with 22% of GDP for spending and 21% of GDP for revenue. We need 19% for spending and 18% for revenue.

As Kent Conrad said, "We have to gore all the oxes around here".

[opebo]

This obsession with specific percentages of GDP is pointless.   We'd all be better off if around 10% more of GDP were handled by the State instead of by the rich.

[Franzl]

And it shouldn't placate anybody at all, the deficit is still far to high.

The cuts the military are a little high, maybe $50-$75 Billion but the cuts have to be across the board and include defence. Cuts in farm subsidies, federal workers, foreing aid and I beleive there is a freeze in salaries as well, are all great ideas.  I like the increase in retirement age, but you have to be 25 or younger to be impacted by the Social Security age hike.

The tax code changes are also good, cleaning up and simplifying the tax code, reducing corporate tax rates, and removing the alternative minimum tax. 

The targets are a too high, with 22% of GDP for spending and 21% of GDP for revenue. We need 19% for spending and 18% for revenue.

As Kent Conrad said, "We have to gore all the oxes around here".

In all honesty, I think the proposals are all relatively sensible....give or take a couple of symbolc ones that wouldn't really matter much.

It's interesting that the same people (i.e. Obama) that started this whole business are now the loudest voices against actually working towards solving the problem.

[Southern Senator North Carolina Yankee]

And it shouldn't placate anybody at all, the deficit is still far to high.

The cuts the military are a little high, maybe $50-$75 Billion but the cuts have to be across the board and include defence. Cuts in farm subsidies, federal workers, foreing aid and I beleive there is a freeze in salaries as well, are all great ideas.  I like the increase in retirement age, but you have to be 25 or younger to be impacted by the Social Security age hike.

The tax code changes are also good, cleaning up and simplifying the tax code, reducing corporate tax rates, and removing the alternative minimum tax. 

The targets are a too high, with 22% of GDP for spending and 21% of GDP for revenue. We need 19% for spending and 18% for revenue.

As Kent Conrad said, "We have to gore all the oxes around here".

In all honesty, I think the proposals are all relatively sensible....give or take a couple of symbolc ones that wouldn't really matter much.

It's interesting that the same people (i.e. Obama) that started this whole business are now the loudest voices against actually working towards solving the problem.

He picked the wrong people. He wanted political cover and ended up with the real thing instead.

He can't cut the deficit unless its completely through tax hikes, not during a Presidential cycle. 

[Beet]

Obama knew what he was doing when he appointed the commission- get a bipartisan group of people to work outside of political pressures to come up with a plan, and use it to get the discussion started.

He has not spoken out against the commission's proposals, to my knowledge. He has said that this is the first step in the process.