Biggest drop in 77 years

Discussion in 'Politics' started by Soaring, Aug 4, 2009.

  1. Soaring
    Offline

    Soaring Active Member

    Joined:
    May 30, 2009
    Messages:
    502
    Thanks Received:
    91
    Trophy Points:
    28
    Ratings:
    +91
    - This is all the fault of the big 'O'. Hey, I got an idea - let's raise taxes on someone or something. Is it too early to call this the 'new depression'?

    AP ENTERPRISE: Biggest revenue drop since 1932 - Yahoo! News

    AP ENTERPRISE: Biggest revenue drop since 1932

    By STEPHEN OHLEMACHER, Associated Press Writer Stephen Ohlemacher, Associated Press Writer – 21 mins ago

    WASHINGTON – The recession is starving the government of tax revenue, just as the president and Congress are piling a major expansion of health care and other programs on the nation's plate and struggling to find money to pay the tab.

    The numbers could hardly be more stark: Tax receipts are on pace to drop 18 percent this year, the biggest single-year decline since the Great Depression, while the federal deficit balloons to a record $1.8 trillion.

    Other figures in an Associated Press analysis underscore the recession's impact: Individual income tax receipts are down 22 percent from a year ago. Corporate income taxes are down 57 percent. Social Security tax receipts could drop for only the second time since 1940, and Medicare taxes are on pace to drop for only the third time ever.

    The last time the government's revenues were this bleak, the year was 1932 in the midst of the Depression.

    "Our tax system is already inadequate to support the promises our government has made," said Eugene Steuerle, a former Treasury Department official in the Reagan administration who is now vice president of the Peter G. Peterson Foundation.

    "This just adds to the problem."

    While much of Washington is focused on how to pay for new programs such as overhauling health care — at a cost of $1 trillion over the next decade — existing programs are feeling the pinch, too.

    Social Security is in danger of running out of money earlier than the government projected just a few month ago. Highway, mass transit and airport projects are at risk because fuel and industry taxes are declining.

    The national debt already exceeds $11 trillion. And bills just completed by the House would boost domestic agencies' spending by 11 percent in 2010 and military spending by 4 percent.

    For this report, the AP analyzed annual tax receipts dating back to the inception of the federal income tax in 1913. Tax receipts for the 2009 budget year were available through June. They were compared to the same period last year. The budget year runs from October to September, meaning there will be three more months of receipts this year.
    Is there a way out of the financial mess?

    A key factor is the economy's health. The future of current programs — not to mention the new ones Obama is proposing — will depend largely on how fast the economy recovers from the recession, said William Gale, co-director of the Tax Policy Center.

    "The numbers for 2009 are striking, head-snapping. But what really matters is what happens next," he said. "If it's just one year, then it's a remarkable thing, but it's totally manageable. If the economy doesn't recover soon, it doesn't matter what your social, economic and political agenda is. There's not going to be any revenue to pay for it."

    A small part of the drop in tax receipts can be attributed to new tax credits for individuals and corporations enacted in February as part of the $787 billion economic stimulus package. The sheer magnitude of the tax decline, however, points to the deep recession that is reducing incomes, wiping out corporate profits and straining government programs.
    Social Security tax receipts are down less than a percentage point from last year, but in May the government had been projecting a slight increase. At the time, the government's best estimate was that Social Security would start to pay out more money than it receives in taxes in 2016, and that the fund would be depleted in 2037 unless changes are enacted.
    Some experts think the sour economy has made those numbers outdated.

    "You could easily move that number up three or four years, then you're talking about 2013, and that's not very far off," said Kent Smetters, associate professor of insurance and risk management at the University of Pennsylvania.

    The government's projections included best- and worst-case scenarios. Under the worst, Social Security would start to pay out more money than it received in taxes in 2013, and the fund would be depleted in 2029.

    The fund's trustees are still confident the solvency dates are within the range of the worst-case scenario, said Jason Fichtner, the Social Security Administration's acting deputy commissioner.

    "We're not outside our boundaries yet," Fichtner said. "As the recovery comes, we'll see how that plays out."

    The recession's toll on Social Security makes it even more urgent for Congress to address the fund's long-term solvency, said Sen. Herb Kohl, D-Wis., chairman of the Senate Aging Committee.

    "Over the past year, millions of older Americans have watched their retirement savings crumble, making the guaranteed income of Social Security more important than ever," Kohl said.

    President Barack Obama has said he wants to tackle Social Security next year, after he clears an already crowded agenda that includes overhauling health care, addressing climate change and imposing new regulations on financial companies.

    Medicare tax receipts are also down less than a percentage point for the year, pretty close to government projections. Medicare started paying out more money than it received last year.

    Meanwhile, the recession is taking a toll on fuel and industry excise taxes that pay for highway, mass transit and airport projects. Fuel taxes that support road construction and mass transit projects are on pace to fall for the second straight year. Receipts from taxes on jet fuel and airline tickets are also dropping, meaning Congress will have to borrow more money to fund airport projects and the Federal Aviation Administration.

    Last week, Congress voted to spend $7 billion to replenish the highway fund, which would otherwise run out of money in August. Congress spent $8 billion to replenish the fund last year.

    Rep. Richard Neal, D-Mass., chairman of the House subcommittee that oversees fuel taxes, is working on a package to make the fund more self-sufficient. The U.S. Chamber of Commerce, which doesn't back many tax increases, supports increasing the federal gasoline tax, currently 18.4 cents per gallon.

    Neal said he hasn't endorsed a specific plan. But, he added, "You can't keep going back to the general fund."


    We live in a society -
    "of the Government, by the Government, for the Government".
    We are now slaves to A GREEDY government.
     
  2. editec
    Offline

    editec Mr. Forgot-it-All

    Joined:
    Jun 5, 2008
    Messages:
    41,427
    Thanks Received:
    5,598
    Trophy Points:
    48
    Location:
    Maine
    Ratings:
    +5,617
    Yeah things look bleak, I agree.

    We went into this mess already systemically weakened by foolish policies and overspending and we don't seem to be doing a damned thing to address that weaknesses.

    Meanwhile this HC solution looks to be an enormous spending bill and like you I see no way that the government can find the revenues to pay for it.
     
  3. Soaring
    Offline

    Soaring Active Member

    Joined:
    May 30, 2009
    Messages:
    502
    Thanks Received:
    91
    Trophy Points:
    28
    Ratings:
    +91
    The tank is dry, and yet O keeps trying to squeeze a few more drops out of a lemon that is dried up. The real thing that bothers me, is that the congress keeps going along with his madness. Are all of these elected officials that dumb?
     
  4. Care4all
    Offline

    Care4all Warrior Princess Supporting Member

    Joined:
    Mar 24, 2007
    Messages:
    32,769
    Thanks Received:
    6,623
    Trophy Points:
    1,170
    Location:
    Maine
    Ratings:
    +11,098
    Well, July and part of august will help, with the cash for clunkers....$2 billion worth of $4500 per trade....car salesmen are on commission, some reports are that in July of this year, some dealerships sold more than ALL of last year...I'd say on average, each person buying a new car probably spent another 15k for their new car... 10k for a small car and 20k for a bigger car after the $4500 rebate...times however many cars sold during these months of the promotion, should also produce taxes on the dealerships, and on the Parent Auto Industry....let alone alot of car dealerships and car salesmen having alot more dough in their pockets to spend in the economy on other things...

    More than what they estimated, but also far short of what we need!

    Programs like this stimulus, are what we would look for in Retail, to stimulate during a normally down period....we actually need more things like this for the "kick Start"....

    Us American citizens OWN the auto industry...yes, we own 70% of the American Auto Industry with the bailouts we have given them...we do have an interest in this working..and not just for the overall health of the economy....

    See...now if I were in charge of the auto industry....this little promotion that knocked my socks off with its response and return would have me racking my brains on how I could come up with one of these type promotions on my own...because one thing that this promotion would have told me is that my product is overpriced....we have a saying, that there never is bad products, there is only bad prices...in other words if your product is priced correctly then you would sell it at a good pace, at a good 'turn rate', and every dog if there is a dog is only a dog because you have priced it incorrectly to what the market is willing to pay for it...

    The other thing about this promotion is that customers felt they were getting a good deal and the $4500 helped with the down payment for the new car which many probably would not have had or would not have had as much to put down, and because there was so much more put down...CREDIT WAS AVAILABLE for the rest of the car via loan....it is easier to get a loan if you fork up 20% or more for the item you need a loan for....so idealy...this program did help bring in a larger span of eligible customers to buy the product...

    hmmmm, i suppose it could be argued whether this is good or bad...but that's another thread to be imo! :D

    Anyway....I wish I worked for them so I could analyze this whole promotion's success and figure out what they should do next on their own to capitalize on what was learned!

    geez...this is why i do not work anymore...I just get tooooooo in to these kind of things where i actually forget my family, matt and my cat.... I am an abstaining workaholic! :(
     
    • Thank You! Thank You! x 1
  5. Care4all
    Offline

    Care4all Warrior Princess Supporting Member

    Joined:
    Mar 24, 2007
    Messages:
    32,769
    Thanks Received:
    6,623
    Trophy Points:
    1,170
    Location:
    Maine
    Ratings:
    +11,098
    The other thing that was good for the auto industry was that they got to liquidate stale inventory, opening up the money to cautiously buy new inventory....getting rid of "dead wood" is always a good thing for any business....

    Down the road, "new car envy" will take place with those who did not buy a new car on this promotion.... and keeping up with the Jones' will take hold! :eek: so future sales will continue at a better pace, after this promotion ends is my bet....

    Believe it or not, this also helped the Credit industry which we also need to do well...an awful lot of car loans were made...at, maybe 6% interest?
     
  6. editec
    Offline

    editec Mr. Forgot-it-All

    Joined:
    Jun 5, 2008
    Messages:
    41,427
    Thanks Received:
    5,598
    Trophy Points:
    48
    Location:
    Maine
    Ratings:
    +5,617
    They're trying to jumpstart the economy with this stimulation money.

    But the problem is that the car died because it was rode hard and put away wet for the last 40 years.
     
  7. KMAN
    Offline

    KMAN Senior Member

    Joined:
    Jul 9, 2008
    Messages:
    2,683
    Thanks Received:
    268
    Trophy Points:
    48
    Ratings:
    +269
    Tax Revenue down... Yet we are going to force tax payers to pay for health care now.... Yeah, that makes total sense... but then again when have liberals ever been accused of having common sense.
     
  8. Skull Pilot
    Offline

    Skull Pilot Platinum Member

    Joined:
    Nov 17, 2007
    Messages:
    31,793
    Thanks Received:
    4,496
    Trophy Points:
    1,130
    Ratings:
    +10,087
    The Obama tax/spend policy

    [​IMG]
     
    • Thank You! Thank You! x 1
  9. PatekPhilippe
    Offline

    PatekPhilippe Senior Member

    Joined:
    Jul 30, 2009
    Messages:
    8,171
    Thanks Received:
    1,200
    Trophy Points:
    48
    Location:
    Sasebo Japan
    Ratings:
    +1,200
    Care4all,
    I'm sorry. I fail to see how the "Cash for Clunkers" Program will magically bring the economy back from the brink of disaster.
    First of all...the 4,500 dollar payout for every single new car eligible under this program is a myth....
    Second of all....new car envy may take hold but when you don't have a job it's kind of hard to make those 500 dollar a month car payments....
    Third...when your credit score is in the sh!tter because you lost your job and couldn't pay your mortgage...who the heck will lend you any money on a burger flipper salary or while collecting welfare?

    This whole myth about the credit markets opening up and lending money to the average Joe cracks me up. They aren't going to give a single dime to the unemployed..and they surely won't lend any money to high risk borrowers..which is determined by your....what? Credit Score.
     
  10. Care4all
    Offline

    Care4all Warrior Princess Supporting Member

    Joined:
    Mar 24, 2007
    Messages:
    32,769
    Thanks Received:
    6,623
    Trophy Points:
    1,170
    Location:
    Maine
    Ratings:
    +11,098
    Jimminee Christmas!

    this is $2 billion of a $750 billion plus stimulus plan!

    Who in their right mind would think that this one small stimulus promotion was going to save the entire economy?

    Not me!
     

Share This Page