Examination of BEA numbers with an eye to taxes and deficits

Investments, gold, currencies, surviving after a financial meltdown

Examination of BEA numbers with an eye to taxes and deficits

Postby OLD1953 » Sat Apr 09, 2011 5:23 am

Taxes and tax cuts and what actually occurred.

Ok, go here

http://www.bea.gov/national/nipaweb/Tab ... tYear=2010

and set the first year to 1995, last year to 2010 and use annual only, this is my raw data for the GDP vs govt spending. I did NOT use the chained dollar tables, you can't spend chained dollars that assume appreciation in items that isn't part of the item's cost.

After some removal of data I didn't need and transposing the tables, you get this: (Note carefully, I did NOT include social security here. That's total expenditures, and I'm looking at separate expenditures in this "slide".)

------
******** GDP Govt expenditures Federal defense Nondefense State and local
1995 7,414.70 1,374.00 518.8 348.8 170 855.3
1996 7,838.50 1,421.00 527 354.8 172.2 894
1997 8,332.40 1,474.40 531 349.8 181.1 943.5
1998 8,793.50 1,526.10 531 346.1 184.9 995
1999 9,353.50 1,631.30 554.9 361.1 193.8 1,076.30
2000 9,951.50 1,731.00 576.1 371 205 1,154.90
2001 10,286.20 1,846.40 611.7 393 218.7 1,234.70
2002 10,642.30 1,983.30 680.6 437.7 242.9 1,302.70
2003 11,142.10 2,112.60 756.5 497.9 258.5 1,356.10
2004 11,867.80 2,232.80 824.6 550.8 273.9 1,408.20
2005 12,638.40 2,369.90 876.3 589 287.3 1,493.60
2006 13,398.90 2,518.40 931.7 624.9 306.8 1,586.70
2007 14,061.80 2,674.20 976.3 662.3 314 1,697.90
2008 14,369.10 2,878.30 1,079.90 737.3 342.5 1,798.50
2009 14,119.00 2,914.90 1,139.60 771.6 368 1,775.30
2010 14,660.40 3,000.20 1,214.30 817.7 396.6 1,786.00
------


Which as % of GDP yields this:

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Govt expenditures Federal Nat defense Nondefense State and local
18.53 7.00 4.70 2.29 11.54
18.13 6.72 4.53 2.20 11.41
17.69 6.37 4.20 2.17 11.32
17.35 6.04 3.94 2.10 11.32
17.44 5.93 3.86 2.07 11.51
17.39 5.79 3.73 2.06 11.61
17.95 5.95 3.82 2.13 12.00
18.64 6.40 4.11 2.28 12.24
18.96 6.79 4.47 2.32 12.17
18.81 6.95 4.64 2.31 11.87
18.75 6.93 4.66 2.27 11.82
18.80 6.95 4.66 2.29 11.84
19.02 6.94 4.71 2.23 12.07
20.03 7.52 5.13 2.38 12.52
20.65 8.07 5.46 2.61 12.57
20.46 8.28 5.58 2.71 12.18
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Already, we can see several things, among them that the bailouts moved a significant percentage of the GDP into other hands, as shown by the sudden changes in the numbers during the bailouts. It also shows defense jumping from a total of 3.73 % of GDP to the current high of 5.78% of GDP. A note on that, many seem to think we are currently reducing defense spending, this is not the case at all. Though spending on the current wars is reduced, much of the early spending was shifted to later years, as in damaged equipment that must be repaired or reconditioned or replaced, and the bill for that is now due. Congress has eagerly passed pay increases and bonuses for military members, and that is now coming due. Certain contracts are being cancelled or renegoiated and that's not cheap either. Also, as a side note, the decline in defense spending from 1990 to 1998 was planned as part of the Contract with America at the end of the Cold War, and is referenced in George Bush's (Sr) final State of the Union address : http://www.presidency.ucsb.edu/ws/index ... z1J09RjmKB

******
But do not misunderstand me. The reductions I have approved will save us an additional $50 billion over the next 5 years. By 1997, we will have cut defense by 30 percent since I took office.
******

It's obvious where money was transferred to the states, and when, and that these moneys are running out. But the tables tell the story, so on to the next part of the question, what was the effect of the Bush (Jr) tax cuts on government income overall?

http://www.bea.gov/national/nipaweb/Tab ... Java=Y#mid

Same deal as before, set first year to 1995, last year to 2010 and use annual only, this is my raw data for overall govt receipts and expenditures.

Ok, I'm going to split this two ways, income tax vs GDP and total receipts vs GDP as a percentage for each year, both total govt tables and just federal tables. Given that these were primarily cuts in income taxes, this shows the effect on both total receipts and on income tax collections directly, without any obfuscation as to what was what. (Numbers tell a story, but only tell a complete story if someone doesn't pull pages out of the book!)

Please to remember that states generally base their income tax collections off the federal percentages. I don't claim to be familiar with governing law in 46 states with income tax, but I do know that most follow the federal tax percentages. (Four states do not have income taxes, I add this before someone claims I think there are 46 states.)

Ok, total figures for everything first.

------
receipts tax receipts Personaltaxescorp income tax expenditures Total receipts Total expenditures GDP
1995 2,215.50 1,516.70 743.9 211 2,412.50 2,235.50 2,480.10 7,414.70
1996 2,380.40 1,641.50 832 223.6 2,505.70 2,403.50 2,583.20 7,838.50
1997 2,557.20 1,780.00 926.2 237.1 2,581.10 2,584.20 2,658.00 8,332.40
1998 2,729.80 1,910.80 1,026.40 239.2 2,649.30 2,762.20 2,735.20 8,793.50
1999 2,902.50 2,035.80 1,107.50 248.8 2,761.90 2,939.20 2,874.80 9,353.50
2000 3,132.40 2,202.80 1,232.30 254.7 2,906.00 3,168.10 3,021.50 9,951.50
2001 3,118.20 2,163.70 1,234.80 193.5 3,093.60 3,155.60 3,220.80 10,286.20
2002 2,967.90 2,002.10 1,050.40 181.3 3,274.70 3,000.50 3,422.90 10,642.30
2003 3,043.40 2,047.90 1,000.30 231.8 3,458.60 3,071.40 3,624.60 11,142.10
2004 3,265.70 2,213.20 1,047.80 292 3,653.50 3,296.00 3,827.00 11,867.80
2005 3,659.30 2,546.80 1,208.60 395.9 3,916.40 3,691.60 4,109.90 12,638.40
2006 3,995.20 2,807.40 1,352.40 454.2 4,147.90 4,028.30 4,319.80 13,398.90
2007 4,197.00 2,951.20 1,488.70 420.6 4,430.00 4,228.80 4,636.90 14,061.80
2008 4,074.00 2,780.30 1,438.20 280.2 4,737.70 4,107.90 5,020.20 14,369.10
2009 3,726.90 2,409.30 1,140.00 231.4 4,998.80 3,752.20 5,344.90 14,119.00
2010 3,985.10 2,629.80 1,166.80 391.8 5,284.30 4,004.60 5,563.70 14,660.40
------


And now the percentages:

------
receipts tax receipts Personaltaxes corp income tax expenditures Total receipt Total expenditures
1995 29.88 20.46 10.03 2.85 32.54 30.15 33.45
1996 30.37 20.94 10.61 2.85 31.97 30.66 32.96
1997 30.69 21.36 11.12 2.85 30.98 31.01 31.90
1998 31.04 21.73 11.67 2.72 30.13 31.41 31.10
1999 31.03 21.77 11.84 2.66 29.53 31.42 30.74
2000 31.48 22.14 12.38 2.56 29.20 31.84 30.36
2001 30.31 21.03 12.00 1.88 30.08 30.68 31.31
2002 27.89 18.81 9.87 1.70 30.77 28.19 32.16
2003 27.31 18.38 8.98 2.08 31.04 27.57 32.53
2004 27.52 18.65 8.83 2.46 30.78 27.77 32.25
2005 28.95 20.15 9.56 3.13 30.99 29.21 32.52
2006 29.82 20.95 10.09 3.39 30.96 30.06 32.24
2007 29.85 20.99 10.59 2.99 31.50 30.07 32.98
2008 28.35 19.35 10.01 1.95 32.97 28.59 34.94
2009 26.40 17.06 8.07 1.64 35.40 26.58 37.86
2010 27.18 17.94 7.96 2.67 36.04 27.32 37.95
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Again, the bailouts and the recovery act show up plainly, but also there is a clear drop of about 4% of GDP from receipts, due to drops in personal and corporate income tax receipts. However, this is TOTAL government, top to bottom, how did this affect federal receipts?

Once more thru the wringer at BEA, http://www.bea.gov/national/nipaweb/Tab ... tYear=2010

Same thing as before, pull the 1995 - 2010 annual series.

------
receipts tax receipts Personal tax corp income tax expenditures GDP
1995 1,407.80 844.6 585.8 179.3 1,631.40 7,414.70
1996 1,526.40 931.9 663.3 190.6 1,697.80 7,838.50
1997 1,656.20 1,030.10 744.2 203 1,728.80 8,332.40
1998 1,777.90 1,115.80 825.2 204.2 1,761.00 8,793.50
1999 1,895.00 1,195.40 893 213 1,828.70 9,353.50
2000 2,057.10 1,309.60 995.6 219.4 1,900.60 9,951.50
2001 2,020.30 1,249.40 991.8 164.7 2,014.10 10,286.20
2002 1,859.30 1,073.50 828.6 150.5 2,162.60 10,642.30
2003 1,885.10 1,070.20 774.2 197.8 2,329.30 11,142.10
2004 2,013.90 1,153.80 799.2 250.3 2,465.40 11,867.80
2005 2,290.10 1,383.70 931.9 341 2,667.40 12,638.40
2006 2,524.50 1,558.30 1,049.90 395 2,799.60 13,398.90
2007 2,654.70 1,637.60 1,165.60 362.8 2,996.20 14,061.80
2008 2,503.10 1,447.80 1,102.80 232.2 3,286.40 14,369.10
2009 2,205.80 1,142.40 852.7 182.1 3,703.10 14,119.00
2010 2,386.60 1,298.60 875.1 304.3 3,912.60 14,660.40
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And now, the final data, what was personal and corporate income as a percentage of GDP during this period?

Back to this table:

http://www.bea.gov/national/nipaweb/Tab ... 0&Freq=Qtr

Same annual series, and we get:

------
GDP Natl income Adjusted Corp income Personal income %Natl income %Adj'd Corp income %Personal income
1995 7,414.70 6,522.30 716.2 6,200.90 87.96 9.66 83.63
1996 7,838.50 6,931.70 801.5 6,591.60 88.43 10.23 84.09
1997 8,332.40 7,406.00 884.8 7,000.70 88.88 10.62 84.02
1998 8,793.50 7,875.60 812.4 7,525.40 89.56 9.24 85.58
1999 9,353.50 8,358.00 856.3 7,910.80 89.36 9.15 84.58
2000 9,951.50 8,938.90 819.2 8,559.40 89.82 8.23 86.01
2001 10,286.20 9,185.20 784.2 8,883.30 89.30 7.62 86.36
2002 10,642.30 9,408.50 872.2 9,060.10 88.41 8.20 85.13
2003 11,142.10 9,840.20 977.8 9,378.10 88.32 8.78 84.17
2004 11,867.80 10,534.00 1,246.90 9,937.20 88.76 10.51 83.73
2005 12,638.40 11,273.80 1,456.10 10,485.90 89.20 11.52 82.97
2006 13,398.90 12,031.20 1,608.30 11,268.10 89.79 12.00 84.10
2007 14,061.80 12,396.40 1,510.60 11,912.30 88.16 10.74 84.71
2008 14,369.10 12,557.80 1,262.80 12,391.10 87.39 8.79 86.23
2009 14,119.00 12,225.00 1,258.00 12,174.90 86.59 8.91 86.23
2010 14,660.40 12,828.20 1,624.80 12,546.70 87.50 11.08 85.58

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Don't try to add those up to 100%, there are intermediate terms that aren't of interest and I left them out.

What this shows is that national income did not decrease in any year from 1995 to 2006, personal income did not decrease until 2009 but corporate income did decrease in 2001, recovered in 2002, and was increasing with the bubble until 2006. After the bubble burst, bailouts and stimulus became the primary contributors to deficit spending.

From examination of the numbers, it is apparent that drops in adjusted corporate income are not sufficient to explain the increasing deficits. Nor is increased spending solely responsible. A combination of increased spending, primarily on defense, plus the Bush (jr) tax cuts were mostly responsible for increasing deficits, with a minor contribution from a drop in corporate profits in 2001/2002 through 2007, when the bubble blew up. Current revenue imbalances are primarily due to the bailouts and stimulus spending, which is mostly done, and is highly unlikely to be renewed. This will result in a large drop in money available to the states, and that is going to put them in a huge hole. Given that states income tax follows federal income tax, there is going to be increasing pressure from governors for the Congress to raise income taxes.

I have done my best to align things correctly, if they mess up on your browser I apologize in advance. All the above percentages are as a percent of GDP, no chained anything.

(I'm still trying to straighten this out, apparently this isn't recognizing either tabs or spaces. Guess I'll do tables if I can. Have patience.)
Last edited by John on Sun Apr 10, 2011 7:34 pm, edited 1 time in total.
Reason: Straighten columns a little
OLD1953
 
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