-->Hi,

aus dem heutigen Global Economic Forum von MorganStanley zu den Bush Plänen:

<font size="5">Budget and Financing Implications of the Bush Proposals </font>

David Greenlaw (New York)


The president formally unveiled the details of his economic stimulus package in a speech yesterday in Chicago. Many of the key aspects of the proposal had leaked out in recent days, but here is a brief recap.

The plan has seven components -- including 3 major ones. These are:

1) Eliminate taxation of dividends for individual taxpayers.
2) Increase per child tax credit from $600 to $1000.
3) Accelerate tax rate cuts scheduled for 2004 and 2006.

How much are these changes worth? We estimate the dividend change will reduce receipts by a couple of billion dollars in FY 2003 and about $30 billion per year thereafter (note that this is based on static analysis with no macro feedback effects). The increase in the child tax credit amounts to $16 billion in tax rebates in FY 2003 and roughly the same amount of lower tax liability relative to the current phase-in through 2009. The speed-up of the cuts in individual tax rates is worth $15 billion in FY 2003, $35 billion in FY 2004 and smaller amounts in 2005-06. Clearly, the administration is making an attempt to get some money into the economy quickly in the form of tax rebates and withholding changes but much of the budget effect will be delayed until 2004.

All other provisions -- accelerating an expansion of the 10% tax bracket, reducing the so-called marriage penalty, introducing personal reemployment accounts, and increasing expensing options for small businesses -- amount to a combined $15 billion or so in FY 2003 and somewhat greater amounts in 2004 and 2005.

The White House is using a figure of $98 billion in tax relief over the next 16 months in describing their proposal. This time frame was selected because much of the impact will show up in April 2004 tax season payments and refunds. On a fiscal year basis, our estimates show the package is worth $56 billion in FY 2003, $117 billion in FY 2004, $85 billion in FY 2005 and smaller amounts in later years. The total size over 10 years is $674 billion or about half the size of the initial Bush stimulus plan that was enacted in 2001.

So where does this leave the budget deficit? Assuming a brief war in Middle East and enactment of the Bush tax proposal, we estimate the budget deficit would be $275 billion in FY 2003 and would rise to $350 billion in FY 2004 before slipping back to $275 billion in FY 2005. Although it's likely that the Bush proposal will be altered -- perhaps significantly -- as it makes its way through the legislative process, these estimates provide a useful starting point to assess the potential impact on Treasury financing. As seen in the table below, it is not a pretty picture.

Financing Arithmetic (Bil. $)
<pre>
FY Budget Deficit Funding Gap
2003 275 80
2004 350 275
2005 275 0 </pre>

* Funding gap is the required increase in gross issuance relative to the prior year.

Source: Morgan Stanley estimates

Some of the $80 billion funding gap seen in 2003 can be made up with increased bill issuance and slightly larger coupon sizes. However, we suspect that Treasury will also decide to introduce a couple of additional 5-year note auctions -- perhaps beginning in June or July. In FY 2004, regular monthly issuance of 5s would be needed along with modest further hikes in auction sizes of 2s, 10s, and bills to make up the sizable funding gap. A scenario that seems consistent with the 2004 financing need is: quarterly issuance of $24 billion of 10s along with monthly issuance of $32 billion of 2s and $20 billion of 5s (note that the ratio of 2s to 5s would be similar to that seen prior to the 1998 shift to quarterly 5s). Our current estimates suggest that these changes would be sufficient to keep the financing need in balance through 2005.


Gruss
Cosa

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-->Der Irak ist doch nur eine Zwischenzeitnahme vor dem ersten Etappenziel und das heisst: Iran. Wo die Tour endet, das vermag ich noch nicht zu erkennen, bzw. traue ich mich nicht zu äussern.

-->>Der Irak ist doch nur eine Zwischenzeitnahme vor dem ersten Etappenziel und das heisst: Iran. Wo die Tour endet, das vermag ich noch nicht zu erkennen, bzw. traue ich mich nicht zu äussern.