New York Times (April 28)
“California is awash in cash, thanks to a booming market. In a single year, the state’s financial outlook has gone from surplus to deficit to surplus as capital gains tax collections have risen amid a soaring stock market and I.P.O. boom.” At the worst, the state “anticipated a $54 billion shortfall,” but it now expects a $15 billion surplus in the fiscal year that starts July 1.
Tags: Booming, California, Capital-gains, Cash, Deficit, Market, Outlook, Soaring, Stock market, Surplus, Tax collections
The Economist (May 18)
“America’s net public debt is high, if not yet huge” and unless something changes “public debt will rise to 92% of GDP in 2029… and go on rising for decades.” This may not matter so much. “Though debt has grown as a share of GDP, interest payments are near their historical average” and “lower than the nominal growth rate of the economy…. In such circumstances a debt will shrink as a share of GDP over time. If the economy grows faster than interest builds up, the government could run a small deficit forever.”
Tags: Deficit, Economy, GDP, Government, Growth rate, Interest, Public debt, U.S.
The Economist (December 1)
“Personal income tax accounted for only 8% of total tax revenue in China last year, compared with an average of 24% in the OECD, a group of rich countries.” This is largely because tax dodging is ubiquitous. Estimates suggest “only 2% of Chinese pay any income tax.” Since “China has run a budget deficit in 21 of the past 22 years,” however, the government is now making efforts to raise collection to 15%.
Tags: Budget, China, Collection, Deficit, Dodging, Government, Income tax, OECD, Revenue
The Straits Times (February 20)
“In spite of a substantial budget surplus,” Singapore is planning to raise taxes to meet “the challenges that lie ahead—in the form of financing healthcare in an ageing society, meeting infrastructure needs and ensuring security.” This approach starkly contrasts with the U.S., which has cut taxes despite running an enormous budget deficit, but fiscal sustainability has been “a mainstay of Singapore’s economic planning since independence.”
Tags: Budget surplus, Challenges, Deficit, Economic planning, Fiscal sustainability, Healthcare, Independence, Infrastructure, Security, Singapore, Taxes, U.S.
Institutional Investor (July 14)
Brazil hopes that a return of foreign capital might provide “an economic boost.” The country sure needs it. The economy has slumped “from 7.5 percent in 2010 to just 0.1 percent in 2014.” It is now in recession. “The end of the global commodities supercycle and the oil market collapse explain much of the decline, but domestic policy problems—including a growing deficit and accelerating inflation—are also to blame.”
Tags: Brazil, Collapse, Commodities, Deficit, Economy, Foreign capital, Inflation, Oil, Recession, Supercycle
Council on Foreign Relations (February Issue)
“Economists have long argued that taxing oil consumption would be the most efficient way to address U.S. vulnerability to overpriced and unreliable oil supplies. Yet energy taxes are a third rail in American politics.” This may change, however, amid increasing focus on narrowing the deficit. “It might be possible to reconsider oil taxes not only as an unwelcome burden, but as an alternative to something worse.” If done optimally, taxing oil consumption “can improve economic performance while reducing oil consumption.”
Tags: Consumption, Deficit, Economists, Oil tax, Performance, U.S.
Washington Post (July 9)
The U.S. made a huge “blunder” in the 1960s and is still paying the price. “Since 1961, the federal government has balanced its budget only five times. Arguably, only one of these (1969) resulted from policy; the other four (1998-2001) stemmed heavily from the surging tax revenue of the then-economic boom. We are now facing the consequences of all these permissive deficits.”
Wall Street Journal (March 13, 2012)
Is California a Greek tragedy in the making? “The state lurches from fiscal tragedy to fiscal farce, running deficits in good times as well as bad.” Spending has soared and deficits are routine. Making the problem worse, “California’s economy, which used to outperform the rest of the country, now substantially underperforms. The unemployment rate, at 10.9%, is higher than every other state except Nevada and Rhode Island. With 12% of America’s population, California has one third of the nation’s welfare recipients.”
Tags: California, Deficit, Economy, Greece, Unemployment, Welfare
Wall Street Journal (January 20, 2012)
“Run up spending and debt, raise taxes in the naming of balancing the budget, but then watch as deficits rise and your credit-rating falls anyway.” The Journal describes not a European country, but the State of Illinois, which was just downgraded by Moody’s to A2, the worst rating of all 50 states. Among other problems, Illinois “has $6.8 billion in unpaid bills and unaddressed obligations” and a pension fund which covers less than half of its projected liabilities.
“Run up spending and debt, raise taxes in the naming of balancing the budget, but then watch as deficits rise and your credit-rating falls anyway.” The Journal describes not a European country, but the State of Illinois, which was just downgraded by Moody’s to A2, the worst rating of all 50 states. Among other problems, Illinois “has $6.8 billion in unpaid bills and unaddressed obligations” and a pension fund which covers less than half of its projected liabilities.
New York Times (October 11)
The Times applauds economists Christopher Sims and Thomas Sargent, who were awarded the 2011 Nobel in economic sciences. “The prize committee has rewarded two towering intellects—and delivered a challenge to politicians who are driven more by ideology than by serious consideration of the real-world consequences of their actions.” In particular, the Times hopes politicians will recognize “two important approaches: near-term public spending to spur jobs paired with tax increases to pay for the new programs and, eventually, to reduce the deficit.”
