Apparently the markets think that U.S. risk of sovereign default is steadily creeping up. Hedge fund blogger Zero Hedge puts up the numbers here. According to the numbers from finance calculator company Markit, U.S. is a greater default risk than Japan or Germany, among others.
A default would destroy the U.S. economy and TARP recipients, in particular. The Piqqem Sentiment on major TARP holders is more or less neutral, although the bankruptcy of the U.S. Treasury might change that, no?
The two big i-banks, Morgan Stanley (NYSE: MS) and Goldman Sachs Group, Inc. (NYSE: GS), appeared (ironically) among the best positioned, as they are already positioned to pay back TARP money and have marked down their portfolio to reasonable levels.
US Bank Corp. (NYSE: USB) is more or less bulletproof by virtue of its avoidance of the all funny sub-prime lending and bad credit awards that marked the last two years. Watch for further widening of CDS spreads as this could presage a truly awful event that would make even T-bills a less-than-safe haven. Can you say gold and oil, folks?
Friday, February 27, 2009
Could U.S. default on its national debt?
Obama’s Stimulus Bill is a Banker Contrived Debt Scam
The cable news shows tell us Obama’s “stimulus” bill will make things right, when in fact the latest thinly disguised boondoggle — coupled with the multi-trillion dollar banker bailout scams — will soon usher in crushing hyperinflation.It was meant to be this way. It was designed to turn you into a share cropper, a peasant, a modern day version of a serf indebted to the international bankers.
It is quite a toxic stew — stock market on the fall, corporate bankruptcies, bank failures, insurance failures, cities and states on the verge of bankruptcies, a foreclosure epidemic, government bond collapse, pension plans looted, the credit markets in a deep freeze… and yet Bernanke tells us we’ll be fine soon as we get past the rough patch.
Ben and Obama have the answer — more government spending and more debt for our children and their children. In other words, the answer to a crisis created by indebtedness is more debt. It’s like giving a shivering alcoholic a case of Special Brew to cure his alcoholism, as Niall Ferguson, professor of history at Harvard University, so eloquently put it.
Obama’s Deficit Plans May Use Over-Optimistic Growth Forecasts
The $3.55 trillion budget proposal for 2010 the president unveiled yesterday projects 3.2 percent economic growth next year, thanks to a $787 billion fiscal-stimulus measure he signed into law earlier this month that is aimed at creating jobs and consumer demand.
That is twice the 1.5 percent growth projected by the Congressional Budget Office before the stimulus bill was enacted and higher than the 2.1 percent consensus growth estimate by analysts in the Blue Chip Economic Indicators survey. Even those projections may be too optimistic: Federal Reserve Chairman Ben S. Bernanke said this week the U.S. is suffering a “severe” contraction, and a government report today may show the economy shrank more than previously forecast in the fourth quarter.
“One glaring, central risk to the budget’s projections is the economic outlook,” said Joseph Minarik, a senior vice president at the Committee for Economic Development, a Washington-based public policy institution. The budget assumes “the economy is going to turn around more rapidly,” said Minarik, a former associate director at the Office of Management and Budget under President Bill Clinton.
Think the U.S. deficit is bad? Check out the interest payments
The U.S. debt is roughly $10.6 trillion and the government spent $253 billion servicing it last year. With the mounting yearly deficits, that cost is skyrocketing.During the debate over the $787 billion economic stimulus plan aimed at pulling the U.S. economy out of its downward spiral, Republicans argued that the cost was really over $1.1 trillion because of the cost to service the additional debt.
Lest folks think that current low borrowing costs would make the burden a little lighter, Obama’s fiscal 2010 budget projected that during his upcoming four years in office the cost will run roughly $1 trillion.
How does spending $447 billion just in interest payments on the debt in 2013 sound? And $694 billion in 2019 alone? If you want to see those shocking figures in black and white, see page 117 of Obama’s budget. It’s worse than opening your monthly credit card bill and looking at the finance charges on the unpaid balance.
Thursday, February 26, 2009
Obama's Budget: Almost $1 Trillion in New Taxes Over Next 10 yrs
President Obama's budget proposes $989 billion in new taxes over the course of the next 10 years, starting fiscal year 2011, most of which are tax increases on individuals.
1) On people making more than $250,000.
$338 billion - Bush tax cuts expire
$179 billlion - eliminate itemized deduction
$118 billion - capital gains tax hikeTotal: $636 billion/10 years
2) Businesses:
$17 billion - Reinstate Superfund taxes
$24 billion - tax carried-interest as income
$5 billion - codify "economic substance doctrine"
$61 billion - repeal LIFO
$210 billion - international enforcement, reform deferral, other tax reform
$4 billion - information reporting for rental payments
$5.3 billion - excise tax on Gulf of Mexico oil and gas
$3.4 billion - repeal expensing of tangible drilling costs
$62 million - repeal deduction for tertiary injectants
$49 million - repeal passive loss exception for working interests in oil and natural gas properties
$13 billion - repeal manufacturing tax deduction for oil and natural gas companies
$1 billion - increase to 7 years geological and geophysical amortization period for independent producers
$882 million - eliminate advanced earned income tax creditTotal: $353 billion/10 years
Obama unveils $3.6 trillion budget for 'new era'
Saying the time has come to "usher in a new era," President Barack Obama unveiled a sweeping $3.6 trillion budget for fiscal 2010 on Thursday, making a major down payment on his priorities and marking a historic shift toward more government involvement in health care, energy and education while raising taxes on the wealthiest Americans.Sen. Judd Gregg, the New Hampshire Republican who withdrew as Obama's nominee to run the Commerce Department, called the budget a "missed opportunity.""It raises taxes on all Americans, implements massive new spending and fails to make any tough choices to control the deficit and long-term fiscal crisis posed by the huge entitlement programs," Gregg said Thursday.In addition to additional spending on energy and health care, the budget also contains a $250 billion "contingent reserve" in case the Treasury must act further to stabilize the financial system.
Tuesday, February 24, 2009
New retirement savings plans: Senior Democratic lawmaker
The United States may need to create another kind of retirement security program now that trillions of dollars have evaporated from workers' retirement savings, a senior Democratic lawmaker said on Tuesday.For too many Americans, the 401(k) plans that dominate U.S. private-sector retirement savings "have become little more than a high-stakes crap shoot," said Rep. George Miller, chairman of the House Education and Labor Committee.
"If you didn't take your retirement savings out of the market before the (stock market) crash, you are likely to take years to recoup your losses, if at all," the California Democrat said. The 401(k) plans are tax-advantaged savings plans named after a provision of the U.S. tax code.
In the short term, the United States should preserve and strengthen 401(k) plans and root out hidden fees that are eating up much of workers' savings, Miller told a hearing on retirement security.
"But we must also ask the difficult questions about the state of our nation's retirement system as a whole and look to see whether we need to create a new leg of retirement security," Miller said.
House Democrats propose $410B spending bill
House Democrats unveiled a $410 billion spending bill on Monday to keep the government running through the end of the fiscal year, setting up the second political struggle over federal funds in less than a month with Republicans.The measure includes thousands of earmarks, the pet projects favored by lawmakers but often criticized by the public in opinion polls. There was no official total of the bill's earmarks, which accounted for at least $3.8 billion.
The legislation, which includes an increase of roughly 8 percent over spending in the last fiscal year, is expected to clear the House later in the week.
Democrats defended the spending increases, saying they were needed to make up for cuts enacted in recent years or proposed a year ago by then-President George W. Bush in health, education, energy and other programs.
Republicans countered that the spending in the bill far outpaced inflation, and amounted to much higher increases when combined with spending in the stimulus legislation that President Barack Obama signed last week. In a letter to top Democratic leaders, the GOP leadership called for a spending freeze, a step they said would point toward a "new standard of fiscal discipline."
Either way, the bill advanced less than one week after Obama signed the $787 billion economic stimulus bill that all Republicans in Congress opposed except for three moderate GOP senators.
Social Security and Medicare tomorrow
President Obama begins his summit on fiscal responsibility today. Health care and soaring entitlement costs will certainly be discussed. Before we find a solution, we must recognize and agree on the problem, says John C. Goodman, President and CEO of the National Center for Policy Analysis (NCPA).
According to the Social Security and Medicare Trustees:
- The unfunded liability in Social Security and Medicare is more than $100 trillion dollars (that's trillion, not billion), or about 6 ½ time the size of the entire U.S. economy.
- That's the size of our commitments over and above expected premiums and dedicated taxes, measured in current dollars.
- Of this amount, Medicare accounts for about $85 trillion; additionally, Medicaid is almost as large as Medicare and two thirds of that is a federal obligation.
Furthermore, says Goodman, our options are very limited. Even if we decided to close down Social Security and Medicare tomorrow, collecting no more payroll taxes and allowing no more benefit accruals, we still owe about $52 trillion in benefits that have already been earned.
If we stay on the current course, these programs will crowd out every other federal program over time, says Goodman. Social Security and Medicare already have a combined cash flow deficit, which is being covered with general income tax dollars:
- By 2012, they will require one in every ten income tax dollars.
- By 2020, one in four.
- By 2030, one in two.
Never-Never Land
Barely more than one month into its first term, and the administration of President Barack Obama is entering the rarefied world of Never-Never Land — the mythical world of Peter Pan where wishes magically come true and in which the normal laws of nature do not apply. How else, for example, to explain the president’s statements last weekend — delivered apparently with quite a straight face in his weekly radio address — that despite adding probably $1 trillion to the already mushrooming federal deficit and national debt, and on top of an additional $100 billion or so (the actual numbers are impossible to figure at this point) with his just-announced housing-rescue package, he plans to actually cut the deficit in half by the end of his first term?
Monday, February 23, 2009
A full list of the attendees and breakout group moderators, as provided by the White House, follows.Breakout Groups:
Social Security
Moderators: Chair of the National Economic Council Larry Summers and Gene Sperling of the Treasury Department
Healthcare
Moderators: OMB Director Peter Orszag and Domestic Policy Council Director Melody Barnes
Tax Reform
Moderators: Treasury Secretary Tim Geithner and Council of Economic Advisers Chair Christina Romer
Budget Process
Moderators: Transportation Secretary Ray LaHood and Deputy OMB Director Rob Nabors
Procurement
Moderators: Homeland Security Secretary Janet Napolitano, Deputy Secretary of State Jack Lew, and Rahm Emanuel
Fiscal Responsibility Summit Attendees:ADMINISTRATION
Secretary of the Treasury, Tim Geithner
Secretary of Transportation, Ray LaHood
Secretary of Homeland Security, Janet Napolitano
Deputy Secretary of State, Jack Lew
Treasury Department, Gene Sperling
White House Chief of Staff, Rahm Emanuel
OMB Director, Peter Orszag
National Economic Council, Larry Summers
Domestic Policy Council, Melody Barnes
Council on Economic Advisors, Christina Romer
Deputy OMB Director, Rob Nabors
SENATE
Leadership
Senator Mitch McConnell (R), Minority Leader - will not join break-out sessions
Senator Dick Durbin (D), Assistant Majority Leader
Senator Jon Kyl (R), Assistant Minority Leader - arriving at 2:30
Senator Lamar Alexander (R), Republican Conference Chairman
Senator John Cornyn (R), Chairman, National Republican Senatorial Committee
Other Senators (in alphabetical order with Chairs and Ranking Members noted)
Senator Evan Bayh (D)
Senator Max Baucus (D), Chairman of Committee on Finance
Senator Tom Carper (D)
Senator Thad Cochran (R), Ranking Member of Committee on Appropriations
Senator Susan Collins (R), Ranking Member of Committee on Homeland Security
Senator Kent Conrad (D), Chairman of Committee on the Budget
Senator Chris Dodd (D), Chairman of Committee on Banking, Ranking Democrat on HELP
Senator Mike Enzi (R), Ranking Member of Committee on HELP
Senator Lindsey Graham (R)
Senator Judd Gregg (R), Ranking Member of Committee on Budget
Senator Daniel Inouye (D), Chairman of Committee on Appropriations
Senator Amy Klobuchar (D)
Senator Carl Levin (D), Chairman of Committee on Armed Services
Senator Joseph Lieberman (D), Chairman of Committee on Homeland Security
Senator John McCain (R), Ranking Member of Committee on Armed Services
Senator Claire McCaskill (D)
Senator Ben Nelson (D)
Senator Olympia Snowe (R), Ranking Member of Small Business Committee
Senator Arlen Specter (R), Ranking Member of Judiciary Committee
HOUSE
Leadership
The Honorable Nancy Pelosi (D), Speaker of the House of Representatives (will not join breakout sessions)
The Honorable Steny H. Hoyer (D), Majority Leader
The Honorable John A. Boehner (R), Minority Leader
The Honorable James E. Clyburn (D), Majority Whip
The Honorable Eric Cantor (R), Minority Whip
The Honorable Thaddeus G. McCotter (R), Chairman of the Republican Policy Committee
The Honorable Chris Van Hollen (D), Chairman of the Democratic Congressional Campaign Committee
Other Members (in alphabetical order with Chairs and Ranking Members noted)
The Honorable Joe Barton (R), Ranking Member of the Committee on Energy and Commerce
The Honorable Allen Boyd (D)
The Honorable Dave Camp (R), Ranking Member of the Committee on Ways and Means
The Honorable Michael N. Castle (R)
The Honorable Raúl M. Grijalva (D)
The Honorable Darrell E. Issa (R), Ranking Member the Committee on Oversight and Government Reform
The Honorable Ron Kind (D)
The Honorable Barbara Lee (D), Chairwoman of the Congressional Black Caucus,
The Honorable Jim Matheson (D)
The Honorable George Miller (D), Chairman of the Committee on Education and Labor
The Honorable David R. Obey (D), Chairman of the Committee on Appropriations
The Honorable David E. Price (D) - late arrival - approx 1:30/2:00 PM
The Honorable Tom Price (R), Chairman of the Republican Study Committee
The Honorable Charles B. Rangel (D), Chairman of the Committee on Ways and Means
The Honorable Paul Ryan (R), Ranking Member of the Committee on the Budget
The Honorable Stephanie Herseth Sandlin (D), Chairwoman of the Blue Dog Coalition
The Honorable John M. Spratt (D), Chairman of Committee on the Budget
The Honorable John S. Tanner (D)
The Honorable Ellen O. Tauscher (D)
The Honorable Edolphus Towns (D), Chairman of the Committee on Oversight and Government Reform
The Honorable Nydia M. Velazquez (D), Chairwoman of the Committee on Small Business
The Honorable Henry A. Waxman (D), Chairman of the Committee on Energy and Commerce
Community Leaders and Stakeholders Also Attending
(in alphabetical order by organization name)
Bill Novelli, AARP
John Gage, AFGE
John Sweeney, AFL-CIO
Gerry McEntee, AFSCME
Randi Weingarten, AFT
Ed Coyle, Alliance for Retired Americans
Kevin Hassitt, American Enterprise Institute
Richard Umbdenstock, American Hospital Association
Nancy Neilson , American Medical Association
Becky Patton, American Nurses Association
Karen Narasaki, Asian American Justice Center (AAJC)
Dr. Ho Tran, Asian Pacific Islanders American Health Forum (APIAHF)
Gary Flowers, Black Leadership Forum
Eleanor Hinton Hoytt, Black Women's Health Imperative
Alice Rivlin, Brookings Institution
John Castellani, Business Roundtable
Roger Hickey, Campaign for America's Future
John Podesta, Center for American Progress
Larry Korb, Center for American Progress
Dean Baker, Center for Economic and Policy Research
Joe Minarek, Center for Economic Development
Robert Greenstein, Center on Budget and Policy Priorities
Anna Burger, Change to Win
Maya MacGuinneas, Committee for a Responsible Federal Budget
Karen Davis, Common Wealth Fund
Bob Bixby, Concord Coalition
Maya Rockeymoore, Congressional Black Caucus Foundation
Doug Elmendorf, Congressional Budget Office
Marty Ford, Consortium for Citizens with Disabilities
Lawrence Mishel, Economic Policy Institute
Ron Pollack, Families USA
Ellie Smeal, Feminist Majority
Stewart Butler, Heritage Foundation
Bill Spriggs, Howard University
Joe Salomonese, Human Rights Campaign
John Cavanagh, Institue for Policy Studies
Heidi Hartmann, Institute for Women's Policy
Drew Altman, Kaiser Family Foundation
Douglas Holtz-Eakin, McCain Economic Advisor
Hilary Shelton, NAACP
Todd Stottlemyer, National Association of Independent Businesses
Barbara B. Kennelly, National Committee to Preserve Social Security and Medicare
Jackie Johnson Pata, National Congress of American Indians
Janet Murguia, National Council of La Raza
Marc Morial, National Urban League (NY)
Dennis Van Roekel, NEA
David Walker, Peter G. Peterson Foundation
Peter Peterson, Peter G. Peterson Foundation
Al From, Democratic Leadership Council
Andy Stern, SEIU
Fred Goldberg, Skadden
Roger Ferguson, TIAA-CREF CEO
Martin Regalia, U.S. Chamber of Commerce
Fernando Torres-Gil, UCLA
Robert Reischauer, Urban Institute
Michael Graetz, Yale
Democrats rebel against Barack Obama's overhaul of Social Security
Part of the economic agenda is to find a way to reduce long-term spending on Social Security - the pension system - and the government-run health programmes Medicare and Medicaid.
In the next two decades Medicare, which provides healthcare for the retired and disabled, is projected to consume one-quarter of the national budget. Mr Obama also wants to reform Social Security. By 2011 the pension fund will take in less revenue than it pays out. Mr Obama will have to raise taxes and reduce payments.
Nancy Pelosi, the Democratic House Speaker, and other party leaders have been so fierce in their resistance to reducing pension payments that Mr Obama abandoned a plan to announce a Social Security task force at the summit.
Shrinking deficit, not debt
At least he’s acknowledging it as a problem, but President Barack Obama is only addressing part of it when he says he plans to cut the federal deficit in half by the end of his first term. What he’s not saying — and I probably wouldn’t either — is that this means the national debt will keep growing, more slowly but it won’t be going down.
Last year, our government spent $412 billion — about half the size of the stimulus package — making interest payments on the national debt. That’s roughly 10 times the annual budget from all sources for the State of Michigan. Much of that went to foreign governments who loaned us the money because American consumers remain some of the best customers for their exports. They don’t want to see the U.S. economy collapse. (Neither do we.)
Obama Vows to Slash Federal Deficit
“But I want to be very clear,” he said at a White House economic conference involving legislators, business and labor leaders and others. “We cannot and will not sustain deficits like these without end. Contrary to the prevailing wisdom in Washington these past few years, we cannot simply spend as we please and deferthe consequences to the next budget, the next administration or the next generation.”
The president promised, as expected, to halve the deficit that he inherited, estimated at $1.3 trillion or more for 2009, by the end of his first term, partly by having his Cabinet members and other top aides go over the budget “line by line to root out waste and inefficiency,” a process he said was already under way.
Hillary Clinton presses China to keep buying US debt
US Secretary of State Hillary Clinton concluded her weeklong Asian tour Sunday with an explicit appeal to the Beijing government to keep up its purchases of US treasury notes or risk the onset of an even deeper economic crisis engulfing China and the US itself.
On her first overseas trip since being tapped by President Barack Obama, her former rival for the Democratic nomination, as his chief foreign policy representative, Clinton assumed the role of an official high-pressure bond saleswoman.
While the tour also took her to Japan, South Korea and Indonesia, the focus was clearly on economic relations between the US and China.
Her aim was to convince China to keep investing its foreign exchange reserves in US treasury securities in order to help finance the bailout of failing US banks and pay for the $787 billion US stimulus package. The US treasury has indicated it must raise nearly $500 billion in the first quarter of this year alone.
In an interview on China's Dragon TV just before concluding her trip and returning to Washington Sunday, Clinton warned that if the US economy collapsed China would pay a steep price as well. "It would not be in China's interest if we were unable to get our economy moving," she told her interviewer.
"Our economies are so intertwined," she said on the talk show. "The Chinese know that in order to start exporting again to its biggest market ... the United States has to take some drastic measures with the stimulus package. We have to incur more debt."
Saturday, February 21, 2009
Dealing with runaway entitlement spending
PRESIDENT OBAMA says that it's time to stop kicking the can down the road when it comes to dealing with runaway entitlement spending and the grim long-term fiscal picture. This week will put those words to the test.
"We have to signal seriousness in this by making sure some of the hard decisions are made under my watch, not someone else's," he told The Post five days before taking office.
Is that about to happen? The signals are mixed, at best. The fiscal responsibility summit that Mr. Obama announced with fanfare has turned into something of a fiscal responsibility improv, a slapdash affair in which invitations were being issued as late as Friday. It seems destined to end up being yet another gabfest about the dire fiscal situation -- albeit a presidential-level gabfest.
Talk of a commission to deal with Social Security produced such blowback from House Speaker Nancy Pelosi (D-Calif.) and Senate Majority Leader Harry M. Reid (D-Nev.) that the administration gave way -- at least for now. This is not a positive omen. "Social Security, we can solve," Mr. Obama said in his visit to The Post. Yes, but not by ignoring it.
Not since World War II has America spent so much money so quickly.
In the last two years, the United States has run up deficits that amount to a combined $2.5 trillion dollars -- almost a fourth of all the debt the nation has taken on in its entire history.
"It's really staggering to think we're going to have trillion-dollar deficits for the next several years," Rep. Adam Schiff, D-Calif., told FOX News.
The deficit for January alone totaled $83.8 billion, worse than the $78 billion economists expected. The government had run a surplus of $17.8 billion in January 2008.
The huge deterioration in the government's finances reflects the recession, which has cut into tax revenues, and the large amounts of money being spent from the $700 billion finance rescue plan that Congress passed in October. About three-fourths of the deficit increase was related to spending on the bailout program.
A Little Inflation
It’s been a common witticism in recent months: When asked about the possibility of pernicious inflation down the road as a result of the massive amount of money being pumped into the financial system right now, most economists and analysts brush off the question and slyly remark that they’d welcome a little inflation at this point, as a sign the U.S. economy was rebounding rather than getting mired in a deflationary trap.
But Paul Volcker, longtime Federal Reserve chairman now hailed for his aggressive actions to kill inflation in the late 1970s and early 1980s, doesn’t seem to be amused. Mr. Volcker, who is also part of President Obama’s economic team, was the keynote speaker at Columbia University’s sixth annual Center on Capitalism and Society conference, held Friday in New York. He touched on the “shocking” international nature of the current crisis, adding “I don’t remember any time – maybe even the Great Depression – when things went down quite so fast and quite so uniformly around the world.”
Yet he cautioned that the Fed shouldn’t lose sight of a key part of its mandate — to fight inflation. “I think ‘a little inflation’ is bad, because a little inflation means some more inflation,” he said. “I don’t think here’s any arguing for a little inflation solving our problems in any realistic sense.”
“I don’t want to lose the accomplishment of the last 30 years of the central importance of price stability and the role of an independent central bank in maintaining that price stability,” he said.
Obama Writes About the Deficit and Debt
Obama wrote in "The Audacity of Hope" that tax cuts for the wealthy were too deep, that spending was too high, and that politicians were lacking courage to face the future.
Obama's key passage on Page 188 states: "The result of this collective denial of the most precarious budget situation that we've seen in years. We now have an annual budget deficit of more than $300 billion, not counting more than $180 billion we borrow every year from the Social Security Trust Fund, all of which adds directly to our national debt. That debt now stands at $9 trillion -- approximately $30,000 for every man, woman, and child in the country."
How ironic. Those numbers today would sound peachy. Annual budget deficit forecasts are as high as $1.6 trillion, or more than 5 times the sum that Obama lamented in "The Audacity of Hope." The debt is pegged to reach about $15 trillion by the middle of Obama's four-year term -- approximately $50,000 for every man, woman, and child in the country.
Does Barack Obama ever go back, from time to time, and read his own passages from "The Audacity of Hope?" Obama probably doesn't have much time for that, but of course, his writings are no doubt etched into his memory. This particular passage, regarding the deficit and the debt, certainly must stir some thoughts as our new president today reaches his one-month anniversary in office.
Bommer's are on the Defence
From Alternet.org
While the idea of taking away benefits for which workers had already paid was always outrageous, it especially outrageous at a time when these workers have just seen much of the wealth in their homes and their retirement savings disappear in the housing crash and the collapse of the stock market. Making matters even worse is that fact that Peterson's friends in the financial industry, along with many of the economists who would like to cut Social Security, were the primary culprits in this disaster story.
But, President Obama can quickly get us beyond this attempted heist to the benefit of both older workers and the economy. He can simply assure the baby boomers that he will not allow the Peter Petersons of the world attack their benefits.
In fact, he should assure the baby boom cohorts that their social security benefits are safer than having money in the banks (even the government insured ones) and that they can plan accordingly. This may not lead to a huge burst of new spending, but baby boomers will spend more confidently through time knowing that they can count on getting the benefits they have earned.
Republicans moan and groan about “fiscal responsibility”
How dare they speak of fiscal responsibility when their President failed to veto a single appropriations bill during their period of congressional control. Bill after bloated bill was signed into law by President Bush, enacted by a Republican Congress that showed no concern over the dramatically increasing national debt. In election year after election year, we see and hear Republicans talk about “tax and spend” Democrats. Republicans, by their actions, have proven themselves to be the party of borrow and spend, and they are borrowing it from our children and grandchildren, more likely our great grandchildren.
The republicans have become very big spenders. Lowering taxes dose not make you a fiscal conservative. They should focus on lower spending and taxes will take care of themselves. That said, the spending we have seen with the latest "stimulus" is jaw dropping, and dose make republicans comparatively conservative.
Peter Schiff's Solutions
Schiff is a very bright guy and I agree with what he outlines above. I am worried about his recent comments to foreign nations laying out guidelines on how to destroy America thru financial policies.For the last several years, Peter Schiff had been predicting a severe correction in the stock, credit, and housing markets. These predictions were highly unpopular; he was often mocked and ridiculed by other so-called investment experts. In late 2008, Peter’s predictions were largely vindicated, and a shocked consensus took notice.
While it’s important to recall that he was accurate in these particular predictions, his solutions are often lost in the media frenzy. In his books, op-ed pieces, and countless television interviews, Peter has offered the following set of solutions to restore economic viability to our great republic.
1. Increase savings and production. People need to start saving and paying down credit card debt, and the US needs to become a net producer and manufacturer of goods once again.
2. Vote no on all bailouts. Instead, the government should begin eradicating grotesque budget deficits and national debt by reigning in profligate spending.
3. Allow the recession to run its course and rebuild quickly from a fresh start. “Let it collapse today so it can prosper tomorrow.” To use a crude analogy, wildfires are devastating in the short term, but they are extremely beneficial in the long run for the entire ecology. Currently, the trillions of dollars of new government spending is akin to pouring gasoline on the fire. It will only serve to exacerbate the problem and delay meaningful recovery.
4. Let the free market operate without inefficient, ineffective, and cumbersome government involvement. The government should enforce the integrity of free markets, not manipulate them.
5. Drastically cut federal spending. It’s time to quit over spending and over borrowing and start living within our means.
6. Cut corporate and personal income taxes to spur savings, job growth, and real industrial production.
7. Minimize corporate regulation. If you allow the free market to operate, businesses and banks which accrue massive debt will fail. More efficient and fiscally responsible banks and institutions will prevail and restore prosperity to the economy.
8. Restore the value of the US dollar. Since 2002, the US dollar has been devalued by nearly 30%. Put a stop to the Federal Reserve setting artificial interest rates and printing trillions of dollars out of thin air. Instead, get the Fed out of the markets and bring back balanced budgets, low taxes, and robust production.
Friday, February 20, 2009
A promise to run a more transparent government
For his first annual budget next week, President Obama has banned four accounting gimmicks that President George W. Bush used to make deficit projections look smaller. The price of more honest bookkeeping: A budget that is $2.7 trillion deeper in the red over the next decade than it would otherwise appear, according to administration officials.Good for him. Honestly accounting for the budget deficit is a start. The next step is to balance the budget to work down the deficit.The new accounting involves spending on the wars in Iraq and Afghanistan, Medicare reimbursements to physicians and the cost of disaster responses.
But the biggest adjustment will deal with revenues from the alternative minimum tax, a parallel tax system enacted in 1969 to prevent the wealthy from using tax shelters to avoid paying any income tax.
Even with bigger deficit projections, the Obama administration will put the country on “a sustainable fiscal course” by the end of Mr. Obama’s term, Peter R. Orszag, the director of the Office of Management and Budget, said Thursday in an interview. Mr. Orszag did not provide details of how the administration would reduce a deficit expected to reach at least $1.5 trillion this year.
Mr. Obama’s banishment of the gimmicks, which have been widely criticized, is in keeping with his promise to run a more transparent government.
Thursday, February 19, 2009
Wednesday, February 18, 2009
You now owe $10,000 more.
The bill adds $10,000 to each American's debt. No matter how you view it, that's a $10,000 hike in future taxes, not counting interest. We've been lectured often that Americans have become greedy and overly indebted. So how does adding still more debt help? Unless there's an explosion of economic activity directly due to this bill, Americans' standard of living will decline — count on it.
The very word "stimulus" hides a key fact: In essence, we've made a collective decision to let government spend our money for us. We'll see soon whether the 535 wise men and women of Congress do a better job than the rest of us would.
Tuesday, February 17, 2009
Sunday, February 15, 2009
baby boomer applies for Social Security
Casey-Kirschling was born one second after midnight on January 1, 1946, and will receive her first Social Security check in February 2008 as the first wave of baby boomers turns 62 next year and becomes eligible for early retirement benefits.
Social Security Commissioner Michael Astrue said the agency is bracing for some 80 million Americans to apply for retirement benefits over the next two decades.
"We are already feeling enormous pressure from baby boomers being in their peak disability years and now we're preparing for so many of them to file for retirement," Astrue said at a press conference with Casey-Kirschling.
This is historic. The Baby boomers will put American entitlement programs to the test.
As Stimulus Grows, So Does Task of Closing Whopping Deficit
Economists may debate whether the $787 billion stimulus bill Congress sent to the president last night is big enough to lift the nation out of recession. But one thing is certain: It will blast another big hole in an already tattered federal budget."You can't tax your way out of this," said Brian Riedl, a budget analyst at the conservative Heritage Foundation. "You'd have to raise taxes by $8,500 per household in order to close a trillion-[dollar] deficit through tax increases alone."
Riedl noted that federal spending will rise to more than 26 percent of the nation's overall economy this year, driven by the $700 billion rescue of the U.S. financial system and the government's seizure of mortgage giants Fannie Mae and Freddie Mac, as well as the stimulus package. Tax revenues, meanwhile, are forecast to drop to about 16 percent of the overall economy, in part because the recession is reducing earnings and cutting people's tax bills.
Obama has pledged to close the chronic gap between the government's income and its spending, starting with a summit on fiscal responsibility planned for Feb. 23, the day before he addresses a joint session of Congress. Obama has said he wants to tackle the toughest issues in Washington: making a Byzantine tax code simpler and fairer, reducing the skyrocketing rate of growth in Medicare and Medicaid, and assuring that Social Security will survive for future generations.
White House officials have declined to say exactly what is on the summit agenda. But with the stimulus package out of the way, lawmakers and budget analysts said Obama needs to get specific about how he plans to go about the painful work of bringing taxes and spending back into line.
"They have a few more weeks to get away with all this great talk, but sooner or later there's got to be a real budget," MacGuineas said. "They need to put budget reform on a level playing field with reviving the economy if they're going to be taken seriously."
Federal obligations exceed world GDP Does $65.5 trillion terrify anyone yet?
As the Obama administration pushes through Congress its $800 billion deficit-spending economic stimulus plan, the American public is largely unaware that the true deficit of the federal government already is measured in trillions of dollars, and in fact its $65.5 trillion in total obligations exceeds the gross domestic product of the world.
The total U.S. obligations, including Social Security and Medicare benefits to be paid in the future, effectively have placed the U.S. government in bankruptcy, even before new continuing social welfare obligation embedded in the massive spending plan are taken into account.
The real 2008 federal budget deficit was $5.1 trillion, not the $455 billion previously reported by the Congressional Budget Office, according to the "2008 Financial Report of the United States Government" as released by the U.S. Department of Treasury.
The difference between the $455 billion "official" budget deficit numbers and the $5.1 trillion budget deficit cited by "2008 Financial Report of the United States Government" is that the official budget deficit is calculated on a cash basis, where all tax receipts, including Social Security tax receipts, are used to pay government liabilities as they occur.
Thursday, February 12, 2009
The U.S. budget deficit widened more than economists forecast last month
The U.S. budget deficit widened more than economists forecast last month as spending soared and corporate tax receipts shrank, putting the Treasury on course for a record annual shortfall of more than $1 trillion.The excess of spending over revenue in January rose to $83.8 billion, compared with a $17.8 billion surplus in the same month a year earlier. Spending gained 30.6 percent, while revenue dropped 11.4 percent. Corporate tax revenue in the past four months is down 44.3 percent from a year earlier.
The deficit four months into the 2009 fiscal year already is higher than the record for all of the previous year. A recession now in its second year, rising foreclosures and 13 straight months of job losses are cutting tax receipts. At the same time, the government is pledging hundreds of billions of dollars of taxpayer funds to arrest the financial crisis.
“We’re experiencing a terribly challenging fiscal environment and a terribly challenging economic and financial crisis,”
Wednesday, February 11, 2009
Stop worrying and embrace the debt
America is in debt because it wants to be. Unlike any other country, America has believed for a generation that its debt was the fountainhead of its power, the source of its wealth and excess. America has deliberately and with full intent run deficits and financed them through debt, a veritable ATM of cash with which it buys its economic hegemony, and makes payments on its future. It's hard to solve a problem that isn't one to the blind who will not see.
The National Public Debt, at $13 trillion and rising by $1 trillion every month - was never, ever, meant to be repaid. The staggering interest costs that piled on each American every year like one hundred tons of feathers, always had to be paid by the creation of more money, which depended entirely on the stable rise of all the stuff a million miles below. Like a house of cards in a gathering storm, when the inevitable happened in the summer of 2007, the falling price of the American Dream blew the cards away.
On the other side of the world, staring blankly at computer screens awash in red, a worried clutch of foreign faces wondered - wonder - in a thousand foreign thoughts, "Ummmm ... are we gonna get paid?" And for their sins, the answer is no.
As long as the United States of America is committed to defending a way of life measured entirely by gain, the National Public Debt is the sole remaining weapon, the last bullet in the chamber left with which to defend the good Fortress of America.
And as it is the last, faint hope, no patriot wants to screw with that. The only option available to the besieged and beleaguered Alamo is to flood the planet with absolute rivers of more American debt - "stimulus" - in the vain hope that Americans will return to buying stuff at a record pace in order to force the value of the falling junk to rise again, thereby returning the world to its proper axis, moving mirthlessly among the stars and galaxies, drifting further into outer space.
Embrace the debt America, it is the only chance you have.
Total Cost of Stimulating Economy: $9.7 Trillion
The federal stimulus package would raise the government’s commitment to solving the economic crisis to an astronomical $9.7 trillion — enough to pay off more than 90 percent of the nation’s home mortgages.
The commitment is composed of about $1 billion in stimulus packages, about $3 trillion in lending and spending, and $5.7 trillion in agreements to provide aid, the New York Post reported.
The House has approved an $819 billion stimulus plan, which needs to be reconciled with the Senate’s package of at least $780 billion.
The total value of home mortgages in the United States is calculated at $10.5 trillion by the Federal Reserve.
Sen. Byron Dorgan, a North Dakota Democrat, said on the Senate floor last week: “We’ve seen money go out the back door of this government unlike any time in the history of our country.”
Tuesday, February 10, 2009
Senate approves massive economic-stimulus bill
WASHINGTON (MarketWatch) -- President Barack Obama hailed the passage of a massive economic-stimulus bill in the U.S. Senate Tuesday, saying it's a good start for House and Senate negotiators to hammer out a final version later this week.
Senators approved the $838 billion bill by a vote of 61 to 37, handing the president a legislative victory on a measure that he says will save or create as many as 4 million jobs and help the economy recover from the recession.
Feds exapand TALF to 1 Trillion
The Federal Reserve Board on Tuesday announced that it is prepared to undertake a substantial expansion of the Term Asset-Backed Securities Loan Facility (TALF). The expansion could increase the size of the TALF to as much as $1 trillion and could broaden the eligible collateral to encompass other types of newly issued AAA-rated asset-backed securities, such as commercial mortgage-backed securities, private-label residential mortgage-backed securities, and other asset-backed securities. An expansion of the TALF would be supported by the provision by the Treasury of additional funds from the Troubled Asset Relief Program.
New Bailout May Top $1.5 Trillion
The gravity of the financial crisis confronting the Obama administration will come into stark focus today when officials unveil a three-pronged rescue program that may commit up to $1.5 trillion in public and private funds, and possibly more, lawmakers and other officials said.
Another day....another bailout
I guess they need to start using the word trillion. Hundreds of billions just isn't "stimulating" enough.
Monday, February 9, 2009
Nationalize the Fed and Create Our Own Money
- The Federal Reserve Bank is a private institution owned and controlled by private banks. It is a private bank that enriches its private owners.
- The US Mint does not create our money. It creates about 3% of it in the form of dollar bills and coins. The rest is generated through computerized bookkeeping entries by the private banks.
- Banks do not make loans only from money they have on deposit… Through what is called “fractional reserve banking,” They loan well over ten times the amount they have on deposit. This is how our money is created. It is created out of thin air.
- All debt of the US, all corporate debt, and all individual debt are owed to private banks.
- All money is debt.
- Over 20% of our taxes are used just to pay the interest on our government debt
- Banks are no longer limited to loaning money to make their profit. The 1999 abolition of the Glass-Steagall Act allows them to gamble in the stock market, the commodity exchanges, the foreign currency exchanges, collateralized debt obligations, and to buy and sell other banks and businesses.
I posted this excerpt because it contains mostly true aspects of our Federal Reserve that most people have no idea about. But if we were to abolish the Fed then controlling our monetary policy would be the job of politicians. That would be disastrous. Politicians are not economists...they don't have any understanding of the financial systems. Ruling politicians would always lower rates to stimulate the economy...they would never take the unpopular roll or reigning it back in.
U.S. Taxpayers Risk $9.7 Trillion on Bailouts as Senate Votes
The stimulus package the U.S. Congress is completing would raise the government’s commitment to solving the financial crisis to $9.7 trillion, enough to pay off more than 90 percent of the nation’s home mortgages.The Federal Reserve, Treasury Department and Federal Deposit Insurance Corporation have lent or spent almost $3 trillion over the past two years and pledged to provide up to $5.7 trillion more if needed. The total already tapped has decreased about 1 percent since November, mostly because foreign central banks are using fewer dollars in currency-exchange agreements called swaps. The Senate is to vote early this week on a stimulus package totaling at least $780 billion that President Barack Obama says is needed to avert a deeper recession. That measure would need to be reconciled with an $819 billion plan the House approved last month.
Only the stimulus package to be approved this week, the $700 billion Troubled Asset Relief Program passed four months ago and $168 billion in tax cuts and rebates approved in 2008 have been voted on by lawmakers. The remaining $8 trillion in commitments are lending programs and guarantees, almost all under the authority of the Fed and the FDIC. The recipients’ names have not been disclosed.
“We’ve seen money go out the back door of this government unlike any time in the history of our country,” Senator Byron Dorgan, a North Dakota Democrat, said on the Senate floor Feb. 3. “Nobody knows what went out of the Federal Reserve Board, to whom and for what purpose. How much from the FDIC? How much from TARP? When? Why?”
Financial Rescue
The pledges, amounting to almost two-thirds of the value of everything produced in the U.S. last year, are intended to rescue the financial system after the credit markets seized up about 18 months ago. The promises are composed of about $1 trillion in stimulus packages, around $3 trillion in lending and spending and $5.7 trillion in agreements to provide aid.
Federal Reserve lending to banks peaked at a record $2.3 trillion in December, dropping to $1.83 trillion by last week. The Fed balance sheet is still more than double the $880 billion it was in the week before Sept. 17 when it agreed to accept lower-quality collateral.
The worst financial crisis in two generations has erased $14.5 trillion, or 33 percent, of the value of the world’s companies since Sept. 15; brought down Bear Stearns Cos. and Lehman Brothers Holdings Inc.; and led to the takeover of Merrill Lynch & Co. by Bank of America Corp.
Sunday, February 8, 2009
Spending $1 trillion 'hard to fathom' for some lawmakers
From Daytondailynews.com
On Thursday, Feb. 5, he tried to calculate what $1 trillion could buy: Health care for everybody in the United States without health care for six and a half years. It would buy four-year scholarships for 38 million students. It could build 7.7 million housing units. It could rebuild every school in the country four times over.
He admitted those estimates were rough: The calculator he was using didn't go up to 1 trillion.
"It's a lot of money," he said.
To give that number some more context, consider this: According to Amanda King, a graduate student at the statistical consulting center at Wright State University, a stack of $1,000 bills adding up to $1 trillion would be 67.9 miles high. A stack of $1,000 bills adding up to $1 billion, meanwhile, would only be 358 feet high.
The number freaks out lawmakers who worry not just about the nearly $1 trillion stimulus bill, but about the $1 trillion deficit. And don't even get them started on the debt.
"We're in uncharted waters right now," said U.S. Rep. Steve Austria, R-Beavercreek.
Tapping into retirement plans not widespread, survey finds
Just one-in-10 Americans have dipped into their retirement savings from long-term investments, according to new research.
Ninety percent of Americans have not had to withdraw any of their retirement savings from long-term investment products like IRAs, 401(k)s and annuities, according to the Unretirement Index from Sun Life Financial.
Survey participants did not speak favorably of government benefit programs. Confidence that Social Security and Medicare will remain solvent continued falling, especially among workers in their 30s and 40s. Fully 70% of workers age 30-39 and 66% of those in their 40s said they do not believe Social Security will be available when they reach the age of 67.
Stop Digging
From Heritage.org
Another day, another poll showing public support for President Barack Obama’s Trillion Dollar Debt Plan sinking fast. Trying to turn these numbers around, Obama went on the offensiveposh Resort and Spa retreat in Williamsburg, Virginia. Defending his plan, Obama told Democrats: “[We] are not going to get relief by turning back to the same policies that for the last eight years doubled the national debt and threw our economy into a tailspin. … I found this national debt, doubled, wrapped in a big bow waiting for me as I stepped into the Oval Office. … What do you think a stimulus is? It’s spending — that’s the whole point! Seriously.” yesterday delivering some red meat to House Democrats at their
Seriously, where has Obama been the last eight years? What does he think got us into this mess? Where does he think those deficits came from? Here are the facts. Before President Bush took office, the federal government took in $2 trillion in revenue in 2000. In 2009, the federal government is expected to take in $2.4 trillion. After eight years under President Bush, the federal government is taking in $400 billion more a year in revenue. So why did Congressional Budget Office project a $1.4 trillion deficit for the 2009 budget? Massive spending increases. As McClatchy reports “George W. Bush, despite all his recent bravado about being an apostle of small government and budget-slashing, is the biggest spending president since Lyndon B. Johnson. In fact, he’s arguably an even bigger spender than LBJ.” McClatchy goes on to detail Bush’s spending binge including an 18% increase in education spending, a doubling of agriculture spending, the 2003 Medicare expansion which was the “biggest single expansion in the programs history”, and the $295 billion 2005 infrastructure bill.
So to recap, in 2000 the federal government spent just $1.8 trillion. Now the CBO estimates that the feds will spend almost double that, $3.5 trillion, in 2009 (and that does not include Obama’s Trillion Dollar Debt Plan). Combining the increased $400 billion in revenue with the $1.7 trillion increase in spending, we see that the mountains of debt Obama is whining about inheriting all came from massive increases in federal spending. It was borrowing and spending that got us into this mess. Obama’s Trillion Dollar Debt Plan is not a ‘change’ from Bush, it is Bushonomics on steroids.
Treasury Plans More Expansive Approach to Financial Rescue
Treasury Secretary Timothy Geithner's revamp of the $700 billion financial-sector bailout is likely to rely on a broad range of tools, from injecting additional capital into banks and helping homeowners avoid foreclosure to expanding the roles of the Federal Reserve, Fannie Mae, Freddie Mac and the Federal Deposit Insurance Corp., according to people familiar with the matter.The final plan isn't likely to include the creation of a government bank to directly buy bad assets from banks, as was once envisioned. That plan foundered because of its cost and complexity. Instead, the goal will likely be to expand a Fed program to reboot credit markets, among other ways to relieve banks of their bad bets.
For homeowners, the administration is expected to announce a plan that could include the creation of national standards for loan modifications to be adopted by mortgage giants Fannie Mae and Freddie Mac. The plan could include a mechanism to determine the value of homes facing foreclosure -- something that has proven hard to do -- which could speed negotiations with troubled borrowers.
A related move would see the government using taxpayer dollars to give mortgage companies an incentive to modify loans. One idea would help reduce interest rates by having the government match mortgage companies' interest-rate reductions to a certain amount. Mr. Geithner is also expected to express support for legislation that would allow judges to modify the terms of mortgages in bankruptcy court.
Obama stimulus harmful over long haul
From Washingtontimes.com:
President Obama's economic recovery package will actually hurt the economy more in the long run than if he were to do nothing, the nonpartisan Congressional Budget Office said Wednesday.
CBO, the official scorekeepers for legislation, said the House and Senate bills will help in the short term but result in so much government debt that within a few years they would crowd out private investment, actually leading to a lower Gross Domestic Product over the next 10 years than if the government had done nothing.
CBO estimates that by 2019 the Senate legislation would reduce GDP by 0.1 percent to 0.3 percent on net. [The House bill] would have similar long-run effects, CBO said in a letter to Sen. Judd Gregg, New Hampshire Republican, who was tapped by Mr. Obama on Tuesday to be Commerce Secretary.
The House last week passed a bill totaling about $820 billion while the Senate is working on a proposal reaching about $900 billion in spending increases and tax cuts.
But Republicans and some moderate Democrats have balked at the size of the bill and at some of the spending items included in it, arguing they won't produce immediate jobs, which is the stated goal of the bill.
The budget office had previously estimated service the debt due to the new spending could add hundreds of millions of dollars to the cost of the bill -- forcing the crowd-out.
CBOs basic assumption is that, in the long run, each dollar of additional debt crowds out about a third of a dollars worth of private domestic capital, CBO said in its letter.
CBO said there is no crowding out in the short term, so the plan would succeed in boosting growth in 2009 and 2010.
The agency projected the Senate bill would produce between 1.4 percent and 4.1 percent higher growth in 2009 than if there was no action. For 2010, the plan would boost growth by 1.2 percent to 3.6 percent.
CBO did project the bill would create jobs, though by 2011 the effects would be minuscule.
Friday, February 6, 2009
Not a Ponzi scheme
Social Security is not a Ponzi scheme. Social Security is a pay-as-you-go insurance program, and it does exactly what it's supposed to do by using benefits paid by today´s workers to pay for today's retirees. This is not the same as an investment scam where victims are told their money is making money.
Conservatives have been claiming for more than 60 years that Social Security will fail just as all Ponzi schemes do. That hasn´t happened because the Ponzi comparison is bogus. The ratio of workers to retirees has changed over time, but unless Congress allows the system to be abolished, there will never be a time when no workers are paying into the system. Adjustments have been made in the past and will be made again to accommodate demographic changes through the decades. None of this is true in a Ponzi scheme.
As for the nonsensical comparison that in 1940, there were 42 workers to each retiree and today it is only three to one, ... of course there were fewer beneficiaries when the program began. In January 1940, the first monthly benefits were paid, so millions of then-retired workers didn't have the opportunity to contribute payroll taxes and thus earn benefits.
Instead, many of those ineligible for benefits in 1940 had to rely on public assistance or their children to survive their retirement years - exactly the grim future the anti-Social Security crowd seems so eager for us to bequeath future generations.
Confidence in Social Security falling
The survey shows that confidence in Social Security and Medicare is waning, the report said. Sixty-six percent of workers ages 40-49 indicated a lack of confidence in the Social Security system, a figure that grew to 70 percent among workers in their 30s, the report said.
CBO sees accelerating U.S. budget deficit
The U.S. government's budget deficit soared to $563 billion during the first four months of the fiscal year that began on Oct. 1, the Congressional Budget Office said on Thursday, in an estimate that includes money spent to bail out the ailing financial sector.
That bailout, coupled with huge anticipated government spending to help bring the U.S. economy out of a year-long recession, has led many experts to predict a government budget deficit of $1 trillion or more this year -- double last year's red-ink.
Thursday, February 5, 2009
The Lunatics Are Running the Asylum
Our so-called representatives in Congress clearly have no idea what to do to get the economy moving again. Just consider some of the line items they've included in the proposed $900 billion stimulus plan--a plan that is supposed to create jobs and stimulate the economy. The list, compiled by Congressional Republicans and published by CNN.com, bears reprinting in its entirety:
• $2 billion to re-start a near-zero emissions coal power plant in Illinois that the Department of Energy defunded last year because it said the project was inefficient.
• $1 billion for the 2010 Census, which has a projected cost overrun of $3 billion.
• $1.4 billion for rural waste disposal programs.
• $6 billion to turn federal buildings into "green" buildings.
• $1.2 billion for "youth activities," including youth summer job programs.
• A $246 million tax break for Hollywood movie producers to buy motion picture film.
• $650 million for the digital television converter box coupon program.
• $88 million for the Coast Guard to design a new polar icebreaker (arctic ship).
• $448 million for constructing the Department of Homeland Security headquarters.
• $248 million for furniture at the new Homeland Security headquarters.
• $600 million to buy hybrid vehicles for federal employees.
• $400 million for the Centers for Disease Control (CDC) to screen and prevent sexually transmitted diseases.
• $412 million for CDC buildings and property.
• $125 million for the Washington sewer system.
• $150 million for Smithsonian museum facilities.
• $75 million for "smoking cessation activities."
• $200 million for public computer centers at community colleges.
• $75 million for salaries of employees at the FBI.
• $25 million for tribal alcohol and substance abuse reduction.
• $500 million for flood reduction projects on the Mississippi River.
• $10 million to inspect canals in urban areas.
• $500 million for state and local fire stations.
• $650 million for wildland fire management on forest service lands.
• $88 million for renovating the headquarters of the Public Health Service.
• $500 million for building and repairing National Institutes of Health facilities in Bethesda, Maryland.
• $160 million for "paid volunteers" at the Corporation for National and Community Service.
• $5.5 million for "energy efficiency initiatives" at the Department of Veterans Affairs National Cemetery Administration.
• $850 million for Amtrak.
• $100 million for reducing the hazard of lead-based paint.
• $75 million to construct a "security training" facility for State Department Security officers when they can be trained at existing facilities of other agencies.
• $110 million to the Farm Service Agency to upgrade computer systems.
• $200 million in funding for the lease of alternative energy vehicles for use on military installations.
Debt, high taxes economy killers
The best way to pull out of the recession is to keep America competitive in the global marketplace. Competition, both domestically and from abroad, keeps prices low for American consumers and businesses. It also makes us attractive to foreign investors.
The evil twin of high taxes is expanding government spending, and here our performance is deteriorating as well. In the U.S., government (federal, state and local combined) consumes about 37 percent of our economic output. Compare that to China, which claims its government consumes only 30 percent of its economy. It's shocking that, a communist government can boast of consuming less GDP than the U.S. government.
The best recipe for pulling America out of the recession is no secret. It´s a strategy to keep America competitive through: Real tax cuts that lower top tax rates on individuals and businesses (not give-backs or short-term credits that do nothing for the economy), reforming entitlements and putting the brakes on discretionary government spending.
Stimulus package adding debt, not jobs
Democrats blocked out Republican input. I want to see taxpayers keep more of their own money, I want to see the spending more focused on building things such as roads and bridges, and I want to see the price tag brought down dramatically because I don't see how we can pay this back.
The Democratic leadership is using this bill as a vehicle to fulfill all of their bottled up wishes from the past four decades.
Where is all this money going to come from?
We were living on borrowed money even during the high times. We've maxed out the credit card and our debt load is going to scare off our creditors.
President Obama has vowed that he's not going to put off the tough decisions, but spending like this today is going to make situation tomorrow even worse. Members of the House who vote yes on this bill aren't just costing taxpayers the price tag on the bill.
It will cost $247 billion over the next 10 years to pay the interest on this deficit spending - that's money wasted that won't pay for future students' Pell grants or poor families' Medicaid bills."
Despite rising deficit, haven status continues to support dollar
Why is the dollar faring reasonably well despite the U.S.'s rising budget deficit/national debt and little good news of late on the U.S. economy? It's a version of the old notion that 'misery loves company,' -- in this case, "the currencies are equally miserable," so says Andrew Resnick, currency trader.
Historically, a national debt approaching a nation's annual GDP, combined with a recession, and large job losses, would cause a currency to fall substantially, Resnick said. And that's traders' initial inclination, until they look at financial and economic conditions in Britain, on continental Europe, Japan, China, Russia, and Brazil: all are in roughly the same boat, economically, with varying degrees of public debt, he said. If anything, the United States may be viewed as "relatively better off, given that it is later in its economic cycle and will probably recover first," Resnick said.
Wednesday, February 4, 2009
Taxpayers will pay stimulus costs
While lawmakers and economists debate whether the gargantuan stimulus package grinding through Congress will work, one thing is certain: It will create a hefty increase in the federal debt.And that will affect us all directly for years, as well as our children and possibly grandchildren. Even if it succeeds in producing enough jobs and consumer and business spending to end the recession, it could lead to a combination of higher taxes, higher interest rates and possibly reduced government services down the road.
Tuesday, February 3, 2009
Pelosi opposes task force on entitlements
Momentum is shifting against House Speaker Nancy Pelosi (D-Calif.) in the debate over creating a bipartisan task force to reform Medicare, Medicaid and Social Security.
President Obama, who did not support the idea during the campaign, has made several moves of late showing he’s more open to a commission. A turnabout by the president would put pressure on Pelosi, who opposes the idea.
Treasury needs to borrow $493B in current quarter
The Treasury Department said Monday it will need to borrow $493 billion in the first three months of this year, a record amount for the January-March period.The Treasury Department figure comes on top of $569 billion the government borrowed from October through December, the all-time high for any quarter.
The huge amounts of borrowing in the first six months of the budget year reflect the impact of soaring costs to cover the $700 billion financial rescue program and a deepening recession that has cut into tax revenues.
The department estimated that its borrowing needs will drop to $165 billion in the April-June quarter, a period when the government's coffers swell from people paying their income taxes.
Treasury's estimates include the cost of funding the $700 billion financial bailout program that Congress passed on Oct. 3, but do not include the cost of President Barack Obama's more than $800 billion economic stimulus plan.
For the budget year that began Oct. 1, the Treasury's borrowing needs are expected to reach an all-time high, reflecting a budget deficit projected to hit a record above $1 trillion. That will far exceed the current all-time, a deficit of $454.8 billion in the budget year that ended Sept. 30.
The nonpartisan Congressional Budget Office has estimated this year's deficit will hit $1.19 trillion, a figure that does not include the cost of Obama's stimulus package. The price tag of the stimulus package approved by the House last week was $819 billion in tax cuts and increased government spending over two years. The Senate took up a $900 billion version on Monday.
Obama made a fresh appeal to Congress to quickly pass the proposal, saying Monday that "very modest differences" should not delay its swift passage because fresh money is needed to combat what is already the longest recession in a quarter-century.
Treasury's latest report on its borrowing needs included a new estimate from Wall Street bond dealers who projected that the total deficit for 2009 will hit $1.63 trillion.
Besides the cost of Obama's stimulus package, the administration also is considering boosting the $700 billion financial rescue package in the belief that the remaining $350 billion in the program will not be enough to stabilize the banking system, which is still reeling from billions of dollars of losses in mortgages and other bad loans.
President Obama Is Forgetting Us
President Obama has worked hard to get the $900 billion stimulus passed; he's given speech after speech touting the state of the economy, the necessity of stimulus, the efficacy of the bill. But in all the radio addresses and public speeches, I fail to hear the single concern that's most important to our generation: How are we going to repay it?
The answer deceives us by its simplicity -- deficit spending, borrow from China or Japan. But that doesn't answer the question: How are we going to refund this money? Thousands of us are getting our degrees on college loans. And it's painfully clear to us that someday, after graduation, we will have to find work and begin the grueling job of repaying our loans. It's a hard reality, but it's worth it in order to finance our education.
A little-discussed burden of our generation is the debt our parents' generation is leaving to us. The national debt is coming due, and it's nearly $11 trillion that will need to be repaid in 15 or 20 years, on our watch. We are the workforce that must compensate for the recent excesses of our government.
So while we applaud President Obama's good-faith efforts to jump start our economy, we're understandably skeptical about the cost of this stimulus. We realize that something has to be done about our economy. And sure, some of those 3 million jobs will come to us. But 3 million jobs at the price of $900 billion? That's…$300,000 per job? Can it be done more cheaply, Mr. President? How long will we be able to defer paying this debt? How much will taxes be raised to cover this expense? Give us some answers, President Obama.
During the campaign, President Obama often declaimed the failed policies of the last eight years. He needs to remember that among those failures were a deficit-financed war in Iraq and an ineffective $700 billion bank bailout. Not to mention the sizable federal debt that Bush inherited and passed on undiminished. So, for change, what about a government that takes practical steps to get us out of debt? And for hope, what about a plan, a real plan for reducing our deficit and helping the economy without expensive loans?
But no, according to the latest reports, President Obama is satisfied with just passing the bailout and leaving it to our generation to pick up the tab. He's already onto Economic Solution No. 2, a bank to buy the worst of the assets in the economy, the ones that no one else wants. All of course, at a multi-billion dollar cost. And has President Obama explained to us what the price of this will be? How many more millions must we pay in taxes? How is this going to affect our economy in 2015? And 2020? And 2025?
All we get is silence from the Oval Office. President Obama is so busy fixing our parents' problems that he's forgotten to address our vital concerns.
We need more from President Obama than silence. We need answers, solid answers on how long we'll be able to defer paying this loan, and how the interest on this $900 billion will affect our budget, and how, exactly how, he plans to repay it.
Please, President Obama, be frank with our generation. Spend if you need to on the economy, but give us the hard, clear details about the cost. We deserve to know. That's change we can believe in.
Social Security: National Ponzi Scheme
From IBD Editorials:
It goes on to say, "Decades later, the Ponzi scheme continues to work on the 'rob-Peter-to-pay-Paul' principle, as money from new investors is used to pay off earlier investors until the whole scheme collapses."
A Ponzi scheme does not generate any wealth whatsoever; that is why it ultimately collapses.
Today's recipients of Social Security, along with their powerful AARP lobby, represent a powerful political force.
Few politicians are willing to risk their careers alienating today's senior citizens for the benefit of Americans in 2040.
After all, what do today's seniors and politicians care about a 2040 calamity? They will be dead by then.
Monday, February 2, 2009
This Deficit Is Different--And Dangerous
From Forbes.com:
Simplified, the Obama economic plan is one whereby we'll run deficits to fund welfare programs that, by definition, will slow economic growth. Indeed, individual stimulus will involve taking from the productive to aid the less productive, and it's easy to see how this will cause the productive among us to reduce their efforts.
Meanwhile, corporations propped up by federal largess will end up subsidizing their ailing competitors. This is the opposite of what Schumpeter meant when he talked about "creative destruction." In the Schumpeter model, company failure was essential for economic growth, given the certainty that failed or weakened companies would be snapped up and run better by new management. The prevailing economic models of today suggest this true economic stimulant will be shown the door in favor of corporate welfare.
Returning to our national debt, while we may, for now, be able to borrow on good terms from the rest of the world, it seems charitably naïve to assume that this will continue to be the case. Good or bad, our past deficits were largely meant to protect a growth-oriented, capitalistic way of life that made the U.S. a credible debtor.
Our present-day deficits have everything to do with running away from a purer form of capitalism in favor of a corporatist welfare state. That being the case, future economic growth stateside promises to be more sluggish, and if we stop growing, our debt we will necessarily become less attractive to investors. Unless this sad economic chapter can be unwritten, high interest rates are just around the corner.
Democrats Set High Goal Of Sweeping Fiscal Reform
It's the holy grail of Washington politics: a federal budget that generates ample funds through a simpler and fairer tax code, defuses the spending time bomb for health and retirement programs, and supports the nation's economy during the worst downturn in generations.
President Obama and congressional Democrats have high ambitions to chart such a course, and say that they hope to strike a grand bargain with Republicans to bring taxes and government spending back into balance over the next few years, taming budget deficits that threaten to spiral out of control.
Hundreds of billions of pork spending...I am not sure that is a step in the right direction.
The Real Fight Starts After the Stimulus is Enacted
The real stimulus debate hasn't even started yet. Congress will pass President Obama's stimulus package in the next two weeks, more or less as he wants it. The House has already done its part, and the Senate appears likely to follow suit. But when the economy starts to turn up again, perhaps as early as next year, the president will have the real tough decisions to make. He'll have to choose which spending will continue -- or whether any of it will continue at all.
Documentary highlights cause and effect of increasing national debt
We've been warning of the permanent demographic shift that has been occurring in our country. Our government has made promises regarding Social Security and Medicare that we cannot keep without using up the entire budget. And this was true long before the current housing/banking crisis hit us,” Ryan said.Over the last 10 years the nation has gone from a surplus of $559 billion to a deficit of well over $10 trillion and the debt is increasing on an average of $3.4 billion dollars a day. Today the debt averages out to around $184,000 for every person in America.
Since its release in January 2008 the national debt has increased another 2 trillion dollars. Construction workers have even had to replace the dollar sign on the national debt clock in Times Square for the “1” in 10 trillion dollars back in September.
"I.O.U.S.A." splits up the financial crisis into four parts; the deficit, personal savings, trade imbalance and poor leadership.
Sunday, February 1, 2009
A Stimulus Plan With Dual Goals: Reform and Recovery
As President Obama and Congress barrel toward the latest emergency program to resuscitate the American economy, one question is looming over their search for a cure: Can the government fashion a fast and efficient economic stimulus while also seizing the moment to remake America?
For now, Mr. Obama and his aides are insisting they can accomplish both goals, following their mantra of using the urgency of the economic crisis to accomplish larger — and long-delayed — reforms that never garnered sufficient votes in ordinary times.
Good Bank, Bad Bank; Good Plan, Better Plan
THERE is a growing consensus that Washington has two options if it wants to end the credit freeze and restore confidence in our banking system. One is to, in effect, nationalize the major banks, which would be hugely expensive and would undermine our free-market system. The other is the “bad bank” solution, under which the government would print enormous amounts of money to buy all these banks’ “toxic” assets and to put them into a huge new financial institution that would operate under federal control and sell them off over time. This is a better idea than nationalization, but the proposals along these lines being bandied around Washington would all be prohibitively expensive and probably ignite inflation.
Instead of printing up money to create a huge, unwieldy “bad bank,” I would recommend creating separate bad banks for each of these four institutions (and perhaps some others), and financing them by having the government assume an amount of each good bank’s corporate debt equal to the value of the troubled assets put into the bad banks.
On the Stimulous Plan...
Although the proposal has been billed as a transportation and infrastructure investment package, only 3 percent of the proposed funding would be for road and highway spending. Instead the bill includes billions of dollars for federal subsidies, pet projects and bureaucracy, including $600 million to buy new cars for the federal government and $275 million to upgrade computers at the State Department.
We already have a $10 trillion debt. It would be irresponsible to borrow another $825 billion and pass this massive debt on to our children and our grandchildren with no reasonable expectation that it will create jobs or boost the economy.
Instead, I supported an alternative bill that would have cost half the money and created twice as many jobs. This measure failed to pass the House.
The so-called stimulus package that just passed the U.S. House will not only fail to accomplish its stated purpose, it will damage the economic health of our country for decades to come.
President Barack Obama at least tried to reach out to House Republicans, meeting with us earlier in the week. His best attempts fell flat, however, as not a single Republican voted for the package. Speaker Nancy Pelosi and her liberal chairmen did not even attempt to reach out.
The problem started when Democrats began dusting off proposals rejected during years of Republican control and festooned the package with pork-like projects that would never pass muster in a stand-alone bill. They then rushed it through on an artificial deadline with little debate or consideration. Even worse, most of the bill no longer has anything to do with creating jobs and creating them quickly.
From Washingtonpost.com:
Eight Questions on the Stimulus Package:
Do we really need to do this?
Where would the money come from?
How quickly would the money be spent?
How would the money be spent?
Where would the jobs be?
How would we know the plan was meeting its goal of saving or creating 3 to 4 million jobs?
How quickly would the economy recover?
Would this be the beginning of a new New Deal?