Bonddad v Treasury Secretary Snow (shameless shill)
Wed Feb 08, 2006 at 06:40:46 AM PDT
I hate Treasury Secretary Snow. I refer to him as an idiot, dolt and moron. Yesterday Treasury Secretary Snow testified before the Senate Finance Committee. The topic was the President's 2007 budget. Snow's opening statement is full of incredibly gaping economic holes that have no base in reality. Below I will explain why.
bonddad's diary :: ::
Snow's pack of lies, er, testimony, is here
I'm pleased to be here today to talk with you about the President's Fiscal Year 2007 budget. This budget represents the President's dedication to fiscal discipline, an efficient federal government and the continuation of a thriving U.S. economy.
This is just too much. Bush is "dedicated to fiscal discipline?" Let's look at the facts, Johnny. According to the Congressional Budget Office
Total government revenues for 2001 were $1,991.4 trillion and 2,153.9 in 2005 for an increase of 8.16%. Over the same years government spending increased from $1,863.2 trillion in 2001 to $2,472.2 trillion in 2005, or an increase of 32.68%. A large amount of this increase came from discretionary spending, which increased from $649.3 billion in 2001 to $967.9 billion in 2005, or an increase of 49%
. Of course, there is also the increase in total federal debt which increased from $5.2 trillion in 2001 to $8.2 trillion in 2005, an increase of 57%
. That is some serious responsibility.
It also seeks to avoid a tax increase by making the President's tax cuts permanent; I want to take a moment to explain why that is entirely consistent with our deficit-cutting goals.
In short, lower tax rates are good for the economy and a growing economy is good for Treasury receipts. Indeed, our rate of economic growth led to record levels of Treasury receipts in 2005. And, going forward, we project that receipts will rise every year. In 2011 we will again reach, as a percentage of GDP, the levels we've seen over the average of the last 40 years.
Notice how Snow sidesteps a really crucial number here? Yes, total
Federal Receipts were a record last year. However, Snow avoids talking about how individual
income receipts are still 6.7% below the levels when Bush came into office (994 billion in 2001 verses 927 in 2005)? Nice move to the left there, Johnny. Way to avoid the inherent problem of your tax cuts not paying for themselves
. Also note that current revenue projections from the CBO assumes the tax cuts expire in 2010. In other words, the only way to get revenue back to 10% of GDP levels (a whoppingly painful amount of taxes) is for the tax cuts to expire.
In addition, Snow completely avoids the CBO's analysis
which concluded that an extension of Bush's tax cuts beyond 2010 would result in a cumulative deficit of 2.5 trillion
If all of the tax provisions that are scheduled to expire were extended together, the revenue projection for 2006 would be about 11.5 billion lower. That revenue loss would grow to 57 billion in 2007 and to 106 billion in 2010, before jumping to 254 billion in 2011 and then reaching 455 billion in 2016. For the entire 2007-2016 period, projected revenues would be reduced by about 2.64 trillion.
Since May of 2003, the economy has created 4.7 million jobs, two million of them in the last year alone. We found out on Friday that unemployment has fallen from 4.9 percent to 4.7 percent, running lower than the average for the 1970s, 1980s and 1990s. GDP growth was three and a half percent last year. U.S. equity markets have risen, and household wealth is at an all-time high.
This is by far my favorite trick of this administration. Notice how Snow uses May 2003
as the starting point for his jobs measurement? I wonder why that is? Could it be that May 2003 was the low point
of total jobs in the US over the last 5 years? Yes, I think that's it. How does Bush's entire
term look? You know - since he was sworn into office
? In January 2001 there were 132,471,000 establishment jobs in the US. In December of 2005 there were 134,371,000 - an increase of 1.9 million jobs over 5 years. Wow - that's impressive. Of course, Snow also avoids the fact the economy has lost 2.8 million manufacturing jobs
or that Bush's best areas of job creation PAY $9000/LESS PER YEAR THAN THE JOBS THEY REPLACE
How about the fact that inflation adjusted non-supervisory wages have risen under 3% over the last 5 years, John? I could go on and mention that national income is down and poverty is up
because this economy is not creating good-paying jobs, but that would be overkill.
Household net worth - that's assets minus debts - is a record high, and not just because of housing. Deposits - the money in checking accounts, savings accounts, and money market funds - are at a record high and are larger as a share of disposable income than at any time since 1993. Defaults on residential mortgage loans at commercial banks are at historic lows.
In the past two years, the economy has generated about 170,000 jobs per month, and that includes the two-month slowdown in job growth in the aftermath of Hurricanes Katrina and Rita. In the past 32 years, new claims for unemployment insurance have almost never been as low as they have been recently, the only exception being the peak of the high-tech bubble from November 1999 to June 2000.
Ah yes, the old Kudlow Household net worth argument. First notice how Snow can't mention wages because their performance is terrible. So, we'll find an arcane statistic that sounds really impressive. Here is the main problem with using Household Net Worth. Household net worth was roughly 21 trillion in 1992 and 41 trillion in 2000 - a nearly 100% increase. Over 2000-2005, household net worth has increased from 41 trillion to 51 trillion - an increase of 24%. Using this measurement advanced by the RWNM and used by Snow in his Congressional testimony, Clinton's economy was much better.
So long as we're deriving numbers from the Flow of Funds Report
, how about the fact that total consumer debt now equals 87% of GDP? Or the fact that total consumer debt outstanding has increased from 7.1 trillion in the first quarter of 2001 to 11 trillion in the fourth quarter of 2005 -- a 54% increase
. Also note that his "impressive" deposit statistic represents all deposits
in the US -not just those of individual consumers
This figure includes corporations and foreign depositors. Going back to the Flow of Funds report, corporations are the only economic sector to meaningfully save money in the last 5 years
. Individual's saving have been negative for the better part of the last year and the government has been running in the red ever since Bush was elected the first time.
What bothers me the most about Snow is he has a degree in economics. There has to be a voice in his head that knows his statements are garbage. But he obviously doesn't have a conscience. That's the scariest point.