Congress & White House Taking a Paycut

Our United States Congress meaning the House of Representatives & Senate and the President of the United States of America needs to take a 10% paycut. We need for our nation's politicians to take a paycut so that we can pay on our national debt or better yet pay for some of the President's Job's Plan. Our nation's leaders should tighten their budget like we the American people are doing by taking a paycut.

National Commission on Fiscal Responsibility and Reform meeting

The bipartisan National Commission on Fiscal Responsibility and Reform holds a meeting on Capitol Hill.

If only Congress would accept many of the recommendations that this commission will make than perhaps we can really begin to fix our national debt and budget deficits.

Republicans: Democrats Need to Get Serious About the Debt

Senate Republicans urge Democrats to address our nation's ballooning debt by adopting the Sessions-McCaskill amendment that cuts $296 billion from the budget over the next ten years. Republicans are committed to addressing our national debt.

A Roadmap for America's Future by Paul Ryan

Congressman Paul Ryan (R-WI) has a plan or at least ideas that I think are worth considering if we as a nation are going to eliminate our nation's deficits. In fact, many politicians on both the right and left want to wait until after the midterm elections to deal with our nation's budget deficits and national debt. However Rep. Ryan has offered the only true alternative to the White House plans to deal with the deficit disasters that our nation is facing today. In fact Rep. Ryan's plans and ideas are not simply smoke and mirror plans or rescued plans GOP or conservative plans but they are actually fresh ideas that can actually help curve our nation's debt.

Rep. Ryan's roadmap to America's future centers around dealing with America's healthcare system and the waste involved in that as well as the waste involved in medicare and medicaid which Ryan offers ideas on how to save our nation in the short and long term future. Ryan's plan also has ideas on how to deal with social security so it can be stronger and more Americans can gain access to it in the future and it offers tax reform idea that go beyond simply extending Bush tax cuts as so many conservatives have advocated for and I even support myself since all America's benefited from the cuts in some way shape or form. However Ryan's plan speaks more indepthly about budget reform in terms of Federal Government's major entitlement programs needing to be overhauled so that they work more efficiently and effectively for the American people while saving our nation millions or billions of dollars in terms of waste.

Ryan's best idea for his roadmap for America's future is job training which says

"Roadmap prepares the Nation’s workforce for success in the global economy by creating incentives for States to transform conventional Federal job training into a flexible, dynamic program focused on results, accompanied by clear measures of transparency and accountability."

So to ignore Congressman Ryan's ideas and plan as simply providing tax breaks for the wealthy, ending medicare as we know it, or privatizing social security is just flat out wrong. Congressman Ryan's ideas and plan does not do anything of the such but it does offer clear cut ideas on how our nation can deal with our budget deficits so that our nation's debt doesn't grow any more out of control. So I urge everyone to look at the roadmap and see what you think. I guarantee you that you will come away agreeing with some of Congressman Paul Ryan's ideas and perhaps even wanting to alter other ideas he offers in order to strengthen them..

http://www.americanroadmap.org

Paul Ryan discusses "A Roadmap For America's Future."

"Hi, I'm Paul Ryan -- Congressman from Janesville, Wisconsin, and the Ranking Member of the House Budget Committee -- and I'd like to talk to you about an issue of historic importance for us, and for our children and grandchildren.

Today, America faces a choice between two economic futures.

Currently, we are on a path of unsustainable Federal Government spending. The main problem -- and greatest threat to our nation's economic future -- is the looming crisis of entitlement spending. The well-intentioned social insurance strategies of the past century -- particularly Social Security, Medicare, and Medicaid -- are headed toward financial collapse.

And, as experts have long warned Congress, not only will these programs grow themselves right into extinction, they'll impose a crushing burden on our economy and budget -- piling massive amounts of debt on future generations, crippling our ability to compete in the international marketplace, and dramatically reducing Americans' standards of living.

In fact, by the time my three kids are my age, they will have to pay double the taxes we pay today -- just to keep the government afloat -- no new programs, no new spending -- double the taxes just to maintain the status quo.

Compounding this problem is a tax code that discourages work, savings, and investment -- and puts American companies at a significant competitive disadvantage with businesses overseas.

This is the future we face if we do nothing. I believe we can -- and must -- set a different course. If we begin to act immediately -- there remains the opportunity for a dramatically better American future. But the time for talk has passed. We need a plan.

Over the past few years, I've solicited input from many people -- policy experts, budget and economic analysts, and working people from throughout Wisconsin and the nation. And I've come up with a comprehensive plan to transform the Federal Government -- to fix healthcare, Medicare, Social Security, our trade imbalance, our tax system, and our growing debt.

My legislation -- A Roadmap for America's Future -- achieves the following:

First, it ensures universal access to health insurance; and rescues and strengthens Medicare, Medicaid, and Social Security -- allowing them to fulfill their missions and making them permanently solvent.

Second, it returns Federal spending growth to sustainable levels, and removes the massive future debt burden.

And third, my plan promotes solid, sustained economic growth that provides an ever-increasing number of good-paying American jobs, and puts the U.S. in a position to lead -- not merely survive -- in the global marketplace.

My plan addresses all of these issues at once, because -- whether the issue is health care, international competitiveness, or debt -- piecemeal, incremental "fixes" will never match the magnitude, the urgency, and the interrelated nature of America's greatest domestic challenges. I believe this comprehensive approach is critical to achieving real, long-term solutions.

My plan is also backed up by the numbers. Based on the analysis of government actuaries, this plan is projected to make the Social Security and Medicare programs permanently solvent, and lift the growing debt burden on future generations, while keeping tax rates low.

While there is a consensus in Congress that we do, in fact, have a massive problem on our hands, we are far from agreement on how -- or even if -- we're going to deal with it.

But let me be clear: we're going to have to start tackling these problems, or they're going tackle us. The entitlement crisis is real, it's serious, it's not going away, and it's getting dramatically worse with every year we fail to act.

It may be one of our greatest challenges, but it is also a truly historic opportunity.

A Roadmap for America's Future is a real plan, with real proposals, real numbers to back them, and real legislation to implement it.

Not everybody will agree with every aspect of this proposal, and that's fine. But it is my sincere hope that it will spur Congress to move beyond simply rehashing the problem -- to debating, and implementing actual solutions for the American people.
Thank you."

Budget Deficits + National Debt = Domestic Spending Freeze

The Obama administration is finally getting serious about the nation’s budget deficits and national debt. However some people particularly liberals are screaming that a domestic spending freeze will cut some valuable funding to much needed domestic projects. Still conservatives will argue that it doesn’t go far enough. Therefore it is a win-lose situation for the Obama administration. However it is the right thing to do in order to get the nation’s budget deficits and national debt under control.

Facing voter anger over mounting budget deficits, President Barack Obama will ask Congress to freeze spending for some domestic programs for three years beginning in 2011, administration officials said Monday. The spending freeze would apply to a relatively small portion of the federal budget, affecting a $477 billion pot of money available for domestic agencies whose budgets are approved by Congress each year. Some of those agencies could get increases, others would have to face cuts; such programs got an almost 10 percent increase this year. The federal budget total was $3.5 trillion.

The three-year plan will be part of the budget Obama will submit Feb. 1, senior administration officials said, commenting on condition of anonymity to reveal private details. They said Obama was expected to propose the freeze Wednesday night in his State of the Union address. The Pentagon, veterans programs, foreign aid and the Homeland Security Department would be exempt from the freeze. The savings would be small at first, perhaps $10 billion to $15 billion, one official said. But over the coming decade, savings would add up to $250 billion.

The White House is under considerable pressure to cut deficits — the red ink hit a record $1.4 trillion this year — or at least keep them from growing. Encouraged by last week's Massachusetts Senate victory, Republicans are hitting hard on the issue, and polls show voters increasingly concerned. Still Congressional economists predict a slow recovery and that while budget deficits will decrease in the upcoming years from the trillions back down to the billions, the national debt will continue to grow despite the three year spending freeze the White House is proposing.

Congressional economists are predicting a slow rebound of the economy, with unemployment averaging 10.1 percent this year as the economy grows by just over 2 percent. The latest estimates from the nonpartisan Congressional Budget Office see the economy growing only slightly more next year with an unemployment rate of 9.5 percent. But the CBO also projects that the economy will rebound sharply over the period from 2012-2014. That would be good news for President Barack Obama's re-election prospects. The latest estimates see a $1.35 trillion deficit for the current budget year, dropping to $980 billion next year — but only if a host of tax cuts enacted under President George W. Bush are allowed to expire.

So this year's federal budget deficit will improve slightly thanks to lower spending on the Treasury Department's bank bailout and stronger than expected economic growth, falling to $1.35 trillion from the nearly $1.4 trillion previously projected, according to congressional sources citing a new analysis set to be released Tuesday by the nonpartisan Congressional Budget Office. The deficit is expected to improve over the long run as well, falling to $480 billion in 2015 from previous projections of $560 billion, the sources said.

Therefore the latest congressional budget estimates out Tuesday predict a $1.35 trillion deficit for this year as the economy continues to slowly recover from the recession. The CBO’s report predicts a sluggish economic recovery and continued high deficits that present twin political problems for President Barack Obama and his Democratic allies. The report sees a slow rebound of the economy, with unemployment averaging 10.1 percent this year as the economy grows by just over 2 percent. It would grow only slightly more next year with an unemployment rate of 9.5 percent.

"Economic growth in the next few years will probably be muted in the aftermath of the financial and economic turmoil," the CBO report says. It's a sobering reminder of the fundamental imbalance of the federal government's budget that comes just days before Obama's Feb. 1 budget submission. Therefore Obama’s proposal of a three-year freeze on domestic agency budgets, though the savings would barely make a dent will be a step in the right direction to a degree. Still what the Obama administration hasn’t said they will address is a proposal for tax hikes or cuts to spiraling benefit programs such as Medicare, Medicaid and Social Security.

So while the deficit would slide to $480 billion by 2015, CBO says, but only if tax cuts on income, investments and large estates are allowed to expire at the end of this year. On the other hand, most budget experts see deficits as far higher once tax cuts and other policies are factored in. Thus the 2010 deficit figure is in line with previous estimates and would be a slight decline from last year's $1.4 trillion shortfall. But plans afoot on Capitol Hill for a new jobs bill and a coming Obama request for war funds would add to the total.

Keeping in mind, these figures arrived just hours before the Senate is likely to reject a White House-backed plan to establish a bipartisan task force to recommend steps to curb the deficit. The figures bring continued bad news on the deficit, keeping the pressure on Obama and congressional Democrats to demonstrate they're serious about taking on the flood of red ink.

Thus, the spending freeze, expected to be proposed by Obama during the State of the Union address on Wednesday, would apply to a relatively small portion of the federal budget, affecting a $477 billion pot of money available for domestic agencies whose budgets are approved by Congress each year. Some of those agencies could get increases, others would have to face cuts; such programs got an almost 10 percent increase this year. The federal budget total was $3.5 trillion. The freeze on so-called discretionary programs would have only a modest impact on a deficit expected to match last year's $1.4 trillion. The steps needed to really tackle the deficit include tax increases and curbs on benefit programs like Medicare, Medicaid and Social Security. That's the idea driving the Obama-backed plan to create a special task force to come up with a plan to curb the spiraling budget deficit. But the Senate sponsors of the plan say it's attracted too much opposition from the right and left to prevail.

Republicans say the panel — it would try to develop a deficit reduction blueprint after the November elections for a vote before the new Congress convenes — would lead to big tax hikes. Democratic opponents say they don't want to vote on proposals to cut benefit programs like Social Security without being able to shape the plan. Therefore Obama's three-year spending freeze will be part of the budget Obama will submit Feb. 1. It's likely to confront opposition on Capitol Hill, where a handful of powerful lawmakers write 12 annual appropriations bills. They've gotten used to hefty increases but now are being asked to tighten their belts. House Appropriations Committee Chairman David Obey, D-Wis., declined to comment, his spokesman said. The Pentagon, veterans programs, foreign aid and the Homeland Security Department would be exempt from the freeze.

As stated before the savings would be small at first, perhaps $10 billion to $15 billion, one official said. But over the coming decade, savings would add up to $250 billion which is not a whole lot of money considering that the national debt is nearly $15 trillion plus and might be even higher by then. Thus, it is clear that although the Obama administration inherited a deficit and a high national debt, they have surely added to both and things look to be getting worse if they don’t begin to take steps to do something now. Therefore the spending freeze proposal is bringing angry from the left and criticism from the right that it doesn’t go far enough but right now, it is clear that our nation’s leaders have to reign on spending across the board not just on domestic programs but even foreign programs that are not producing at its highest effective levels.

Even Sen. John McCain, who lost to Obama in last year's presidential election, said he supports any attempt to cut discretionary domestic spending. "We need to do so," he said Tuesday. But in an appearance on ABC's "Good Morning America," the Arizona Republican said Obama "has got to veto bills that are laden with pork-barrel spending, earmarks." Thus on these two issues McCain is right, the Democrats got away with a lot of pork-barrel spending, earmarks, because they layered them in the stimulus bill and last year’s congressional budget which Obama said would be the last time earmarks are included in a congressional budget bill at least under his watch.

Right now more than ever, all political officials in D.C. must get serious about dealing with budget deficits and the national debt which is one the proposed spending freeze is a step in the right direction. However President Obama and his administration can’t just stop there, they must look at cutting spending to certain homeland security projects, the pentagon and foreign aid especially to projects that are effective or perhaps are not working at its highest efficiency levels. It is time for the Obama administration to figure out what works in government and what doesn’t so that wasteful spending is truly eliminated and taxpayer dollars are going toward projects and programs that work effectively and efficiently.

So let the left bark that the spending freeze is unfair and will hurt the American people and let the right bark that it isn’t enough to deal with the mounting deficits and debt but what both don’t understand is that you have to start somewhere and if you don’t than it could lead to deficits and debt that are truly irreversible in the future.

On the Net:
Congressional Budget Office: http://cbo.gov

12/12/09 Weekly Republican Address: Rep. Marsha Blackburn (R-TN)

Rep. Blackburn: "If President Obama has his way, the Copenhagen conference will produce mandatory emissions limits that would destroy millions of American jobs and damage our economic competitiveness for decades to come."

Federal Deficit Records a Record High as National Debt Continues to Rise

The federal budget deficit has surged to an all-time high of $1.42 trillion as the recession caused tax revenues to plunge while the government was spending massive amounts to stabilize the financial system and jump-start the economy. The imbalance for the budget year ended Sept. 30, more than tripled last year's record. The Obama administration projects deficits will total $9.1 trillion over the next decade unless corrective action is taken.

As a portion of the economy, the budget deficit stood at 10 percent, the highest since World War II, according to government data released Friday. President Barack Obama has pledged to reduce the deficit once the Great Recession ends and the unemployment rate starts falling. But economists worry the government lacks the will to make the hard political choices to cut spending and raise taxes to get control of the imbalances.

For 2009, the government collected $2.10 trillion in revenues, a 16.6 percent drop from 2008. The plunge reflected declining income tax collections as millions of Americans lost their jobs or saw their wages cut. Corporate taxes also plummeted as the recession squeezed companies' profit margins.

Government spending last year jumped to $3.52 trillion, up 18.2 percent over 2008. The $700 billion financial bailout fund and increased spending and tax relief from the $787 billion economic stimulus program that Obama pushed through Congress in February drove the increase. For September, a month when the government usually records surpluses, the deficit totaled $46.6 billion. That's a sharp contrast to the $45.7 billion surplus in September 2008, the last time the government's books were in the black.

In issuing the final budget figures, top administration officials said the president was determined to get control of the deficits in coming years. "It was critical that we acted to bring the economy back from the brink earlier this year," White House budget director Peter Orszag said in a statement. "The president recognizes that we need to put the nation back on a fiscally sustainable path."

Failure to curb runaway deficits could trigger a financial train wreck that would push interest rates and inflation higher, and send the dollar crashing if foreigners suddenly started dumping their holdings of Treasury securities. None of those problems are evident now as the worst recession since the 1930s has depressed borrowing by consumers and businesses, giving the government a break on the interest it paid this year on the record debt. Net interest payments actually fell by about $10 billion in 2009 from 2008.

But economists worry investors will grow fearful of the nation's ability to repay all the debt unless the administration and Congress begin developing credible plans to deal with the deficit problem once the recession has ended and unemployment has begun to come down.

Still what is $1.42 trillion? It's more than the total national debt for the first 200 years of the Republic, more than the entire economy of India, almost as much as Canada's, and more than $4,700 for every man, woman and child in the United States. It's the federal budget deficit for 2009, more than three times the most red ink ever amassed in a single year. And, some economists warn, unless the government makes hard decisions to cut spending or raise taxes, it could be the seeds of another economic crisis.

Treasury figures released Friday showed that the government spent $46.6 billion more in September than it took in, a month that normally records a surplus. That boosted the shortfall for the full fiscal year ending Sept. 30 to $1.42 trillion. The previous year's deficit was $459 billion. As a percentage of U.S. economic output, it's the biggest deficit since World War II. "The rudderless U.S. fiscal policy is the biggest long-term risk to the U.S. economy," says Kenneth Rogoff, a Harvard professor and former chief economist for the International Monetary Fund. "As we accumulate more and more debt, we leave ourselves very vulnerable."

Forecasts of more red ink mean the federal government is heading toward spending 15 percent of its money by 2019 just to pay interest on the debt, up from 5 percent this fiscal year. Friday's report showed that the government paid $190 billion in interest over the last 12 months on Treasury securities sold to finance the federal debt. Experts say this tab could quadruple in a decade as the size of the government's total debt rises to $17.1 trillion by 2019.

Without significant budget cuts, that would crowd out government spending in such areas as transportation, law enforcement and education. Already, interest on the debt is the third-largest category of government spending, after the government's popular entitlement programs, including Social Security and Medicare, and the military. As the biggest borrower in the world, the government has been the prime beneficiary of today's record low interest rates. The new budget report showed that interest payments fell by $62 billion this year even as the debt was soaring. Yields on three-month Treasury bills, sold every week by the Treasury to raise fresh cash to pay for maturing government debt, are now at 0.065 percent while six-month bills have fallen to 0.150 percent, the lowest ever in a half-century of selling these bills on a weekly basis.

The risk is that any significant increase in the rates at Treasury auctions could send the government's interest expenses soaring. That could happen several ways — higher inflation could push the Federal Reserve to increase the short-term interest rates it controls, or the dollar could slump in value, or a combination of both. The Congressional Budget Office projects that the nation's debt held by investors both at home and abroad will increase by $9.1 trillion over the next decade, pushing the total to $17.1 trillion decade under Obama's spending plans.

The biggest factor behind this increase is the anticipated surge in government spending when the baby boomers retire and start receiving Social Security and Medicare benefits. Also contributing will be Obama's plans to extend the Bush tax cuts for everyone except the wealthy. The $1.42 trillion deficit for 2009 — which was less than the $1.75 trillion that Obama had projected in February — includes the cost of the government's financial sector bailout and the economic stimulus program passed in February. Individual and corporate income taxes dwindled as a result of the recession. Coupled with the impact of the Bush tax cuts earlier in the decade, tax revenues fell 16.6 percent, the biggest decline since 1932.

Immense as it was, many economists say the 2009 deficit was necessary to fight the financial crisis. But analysts worry about the long-term trajectory. The administration estimates that government debt will reach 76.5 percent of gross domestic product — the value of all goods and services produced in the United States — in 2019. It stood at 41 percent of GDP last year. The record was 113 percent of GDP in 1945.

Much of that debt is in foreign hands. China holds the most — more than $800 billion. In all, investors — domestic and foreign — hold close to $8 trillion in what is called publicly held debt. There is another $4.4 trillion in government debt that is not held by investors but owed by the government to itself in the Social Security and other trust funds.

The CBO's 10-year deficit projections already have raised alarms among big investors such as the Chinese. If those investors started dumping their holdings, or even buying fewer U.S. Treasurys, the dollar's value could drop. The government would have to start paying higher interest rates to try to attract investors and bolster the dollar. A lower dollar would cause prices of imported goods to rise. Inflation would surge. And higher interest rates would force consumers and companies to pay more to borrow to buy a house or a car or expand their business. "We should be desperately worried about deficits of this size," says Mark Zandi, chief economist at Moody's Economy.com. "The economic pain will be felt much sooner than people think, in the form of much higher interest rates and much higher rates of inflation."

If all that happened rapidly, it could send stock prices crashing and the economy tipping into recession. It could revive the pain of the 1970s, when the country battled stagflation — a toxic mix of inflation and economic stagnation. Paul Volcker, then the chairman of the Federal Reserve, responded by raising interest rates to the highest levels since the Civil War in a determined effort to combat a decade-long bout of inflation. His campaign pushed banks' prime lending rate above 20 percent in 1981 and sent the country into what would be the longest post-World War II downturn before the current slump. Unemployment jumped to a postwar high of 10.8 percent in December 1982.

The battle against inflation, though, was won. Most economists say we have time before any crisis hits. In part, that's because the recession erased worries about inflation for now. In its effort to stimulate the economy, the Fed cut a key interest rate to a record low last December and is expected to keep it there possibly through all of next year. Demand for loans by businesses and consumers are so weak that low rates are not seen as a recipe for inflation.

Some hold out hope that Congress and the administration will act before another crisis erupts. Robert Reischauer, a former head of CBO, said that in an optimum scenario, Congress will tackle the deficits next year. A package of tax increases and spending cuts could be phased in starting in 2013 and gradually grow over the next decade. The administration has pledged to include a deficit-reduction plan in its 2011 budget, which will go to Congress in February.

Stanley Collender, a budget expert at Qorvis Communications and a former staff aide to House and Senate budget committees, cautions that unless investors show nervousness about the debt, the budget debate next year could feature more posturing between the two parties than any real action to fix the problems. But Alan Greenspan, who led the 1983 commission that made changes to avert a crisis in Social Security, said in an interview that he was optimistic that politicians will eventually work out a solution. "I have always been a great supporter of Winston Churchill's statement about the United States," Greenspan said. "The United States can be counted on to do the right thing, after having tried all other conceivable alternatives."

Therefore the federal government's budget gap is huge — but by some measures, it's been bigger in the past. The annual budget deficit reached $1.4 trillion in fiscal year 2009, the Obama administration said Friday, a record sum by far in dollar terms. It's the result of both a huge jump in spending and a sharp drop in tax revenue. In effect, the federal government went on a spending binge at the same time it received a sharp pay cut. And if, like an overextended consumer, Washington doesn't mend its ways, it will pay more and more in interest. Interest payments could balloon to $799 billion in 2019 from $191 billion in 2009, according to an estimate by the nonpartisan Congressional Budget Office.

The budget gap reached 10 percent of gross domestic product in fiscal 2009, which ended Sept. 30. GDP is the broadest measure of the economy's output. That's the largest proportion since World War II, when it was much higher. The 1943 deficit, for example, equaled 30.3 percent of the economy. The total national debt is projected to worsen over the next decade unless major changes are made to tax and budget policies. According to the CBO, publicly held national debt — which represents the accumulation of annual deficits — would reach 81.7 percent of the economy by 2019, from about 51 percent in fiscal 2009. Still, that's below the record of 113 percent in 1945. That level of debt could drive interest rates higher as Uncle Sam struggles to finance the flood of red ink.

Nonetheless Friday's announcement raises other questions. Here are some answers.

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DEFICITS, DEFICITS:
$459 billion: 2008 deficit
$1.4 trillion: 2009 deficit, highest on record
$1.4 trillion: 2010 deficit (Projection by Congressional Budget Office)
$974 billion: 2011 deficit (projected)
$633 billion: 2012 deficit (projected)
$1.2 trillion: 2019 deficit (projected)

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BIGGEST DEFICITS AS PERCENTAGE OF GDP, SINCE 1940:
10 percent: 2009 deficit
3.2 percent: 2008 deficit
6 percent: 1983 deficit
21.5 percent: 1945 deficit
30.3 percent: 1943 deficit

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WHEN HAS THE NATION RUN A SURPLUS?
12: Number of years since 1940 the United States has run a budget surplus
28: Number of years the budget was in deficit, 1970-1997
4: Number of years the budget was in surplus, 1998-2001
$70 million: Cumulative U.S. surplus from 1789-1849
$1 billion: Cumulative U.S. debt from 1850-1900

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NATIONAL DEBT, HIGHS AND LOWS:
29.6 percent: National debt — the total of annual deficits — as a percentage of GDP in 1790
2.7 percent: Debt as percentage of GDP in 1916, lowest since 1900
33.4 percent: Debt as percentage of GDP in 1919, after World War I
112.7 percent: Debt in 1945
24.6 percent: Debt in 1974, a postwar low
51 percent: National debt as percentage of GDP, 2009
81.7 percent: National debt by 2019 (CBO estimate)

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NATIONAL DEBT TO GDP (All figures for 2008):
40.8 percent: United States
90.2 percent: Belgium
107.9 percent: Greece
60.6 percent: UK
54.2 percent: France
38.9 percent: Germany

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MAKE LESS, SPEND MORE:
$419 billion: Drop in federal taxes and other revenue from 2008 to 2009
$543 billion: Increase in spending from 2008 to 2009
$2.1 trillion: Federal revenue in 2009
$3.5 trillion: Federal spending in 2009

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PAYING THE PIPER:
$253 billion: Interest paid by government, 2008
$191 billion: Interest in 2009
$799 billion: Projected interest, 2019

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INTEREST COSTS COMPARED for 2009:
4.7 percent: Interest as a proportion of federal spending
18.1 percent: Military's proportion of spending
11.6 percent: Medicare's proportion

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INTEREST COSTS COMPARED for 2019 (White House projections):
14.6 percent: Interest
13.5 percent: Military
16.4 percent: Medicare

So it is clear that the federal deficit reached a record high and the nation’s national debt is continuing to soar to peaks unprecedented. Therefore let’s pray that President Obama and future Presidents deal with this issue in order to spear future generations of Americans from having to deal with the mess we created and left for them. Generational Theft from future generations of Americans didn’t just start today but must end now once and for all if our nation is to be prosperous again.

GM & Chrysler won’t Pay back the American People

Surprise, surprise the American people will not be getting much of its money back from General Motors and Chrysler that was lent them as loans before they went to bankruptcy. Big shocker! General Motors and Chrysler probably won't be able to pay back all those loans we've extended them! From the just-released September report of the Congressional Oversight Panel assigned with keeping an eye on the Troubled Asset Relief Program: Although taxpayers may recover some portion of their investment in Chrysler and GM, it is unlikely they will recover the entire amount. The estimates of loss vary. Treasury estimates that approximately $23 billion of the initial loans made will be subject to much lower recoveries. Approximately $5.4 billion of the loans extended to the old Chrysler Company are highly unlikely to be recovered. The Congressional Budget Office earlier calculated a subsidy rate of 73 percent for all automotive industry support under TARP and recently raised its estimate of the cost of that assistance by approximately $40 billion over the previous estimate.

This comes as we've been getting mostly good news about the money Treasury extended to banks last fall. Even Fannie Mae and Freddie Mac might, if we gave them long enough, be able to pay us back eventually. Why the difference between financial firms and automakers? Part of it is just that GM and Chrysler were struggling companies that had been losing market share for years before the financial crisis hit, while U.S.-based financial firms were doing quite well. The banks simply aren't in the same competitive bind GM and Chrysler are. But another really important part of the equation is that it's pretty easy for the Federal Reserve to create conditions that allow banks to make lots of money—mainly by keeping short-term interest rates really low—whereas doing that for the automakers is much harder. Cash for Clunkers was definitely a gift to the auto industry, but compared with all the Fed's lending programs it wasn't very big, and it benefited other companies more than it did GM and Chrysler. The only way to guarantee GM and Chrysler's profits would probably be to impose a big surcharge on cars made by other manufacturers. Which isn’t going to happen? Basically, it's politically easier in the U.S. to extend corporate welfare to banks than to carmakers. Strange, no?

Does this mean the GM/Chrysler bailout was a failure? Well, as the Elizabeth-Warren-led COP points out again and again in the report, it depends on what the Administration was trying to accomplish: Was the primary purpose of this intervention to provide bridge funding to the automakers, with the expectation that these were viable companies that could eventually repay taxpayers in full? Was it to prevent an uncontrolled liquidation because such a prospect posed a systemic risk to the financial markets and the overall economy? Was it to advance broader policy goals, such as improving fuel efficiency or sustaining American manufacturing and jobs? Or was it some combination of these? To date, Treasury‘s public statements provide little clarity, as each of these objectives has been cited at various times.

Sure seems like that second reason—"to prevent an uncontrolled liquidation"—is the one Treasury ought to be playing up because by that standard the bailout has been a spectacular success. Still last week on the day of President Obama’s big health care speech, there was yet another lesson on why it’s important for the administration to be clear about its goals. The panel that oversees another big and controversial government initiative — the Troubled Asset Relief Program (TARP) — says the taxpayers probably won’t get a lot of their auto bailout money back, and no one can say for sure that that’s a failure because the Treasury Department was so unclear about what it was trying to achieve in propping up the nation’s failing automakers. That’s a bit of a problem, given that Treasury Secretary Timothy F. Geithner has been spending so much time arguing that the federal government is making an overall profit off of the TARP program.

As mentioned, according to the latest report from the Congressional Oversight Panel, which was set up to monitor the bailout program, about $23 billion in loans probably will have “much lower recoveries” than expected — out of the $81 billion the taxpayers are expected to pay for the bailout of General Motors and Chrysler — and about $5.4 billion in loans to the old Chrysler company probably won’t be recovered at all, out of the $14.3 billion Treasury is spending on that company alone. It doesn’t sound like a runaway success, but the panel didn’t come right out and say so. And that’s where the importance of clear goals comes in. If Treasury had put out one set of clear and consistent goals for the auto bailout, the panel said, it would have been easier to measure how well or how poorly the bailout is going. But since Treasury has given lip service to three different goals at different times, the panel basically threw up its hands and said it can’t tell whether the record is better or worse than overseers should have expected it to be.

The three possible goals, according to the panel, were to prevent a broader threat to the economy because of the companies’ collapse; to advance social policy goals, such as preventing greater job losses or stabilizing retirement benefits; and/or to keep the U.S. auto industry alive at a respectable level. But while Treasury has talked about all three goals at one time or another, “it is unclear which objective, or combination thereof, Treasury deems most important — or if all three carry equal weight,” the panel concluded. “As such, in the absence of a clearly articulated unifying strategy, it is difficult for outside observers to determine which metrics are the best indicators of Treasury’s performance.”

Of course, it could be that the panel just didn’t want to take a stand and that blaming Treasury for a lack of transparency was a convenient way to avoid the issue. Still, taxpayers generally do like to have clear goals when their money is being spent. And it can’t just be one presidential speech that sets out those goals. The department that’s in charge of the program has to be able to explain those goals too, in a clear and consistent way. So when President Obama made his case for a critical but potentially expensive makeover of the health care system, he was under pressure to explain exactly what he wants. But the same will be true for the lawmakers writing the bill and the agencies that would implement the new law, too. The clearer the goals are, the easier it will be for the overseers to measure how successful the overhaul is. And it wouldn’t hurt if the public knows what to expect, either.

To a degree President Obama answered many of those questions last Wednesday night. However what should make many people taxpayers angry is that prior to the auto companies going into bankruptcy is that many Congressional leaders advocated for bankruptcy last December before the Bush administration extended GM and Chrysler a life line in the form loans which were suppose to be paid back. Nonetheless the Obama administration came into office and gave them another life line in the form of loans before sending them into bankruptcy where both companies received even more government dollars in order to come out bankruptcy. Therefore, the blame of the auto industry and the fact that they won’t be paying us the taxpayers back billions of dollars doesn’t rest on one administration or one political party. Both Democrats and Republicans are to blame for this and it is clear that we the taxpayers are the ones who get hurt in the end.

Think about it people, this issue was first reported on back when GM and Chrysler were just going into bankruptcy. Now months after General Motors and Chrysler have emerged from bankruptcy, the Treasury Department is telling us the American people that we will not be getting back all the money we gave GM and Chrysler prior to them going into bankruptcy. Nearly $50 billion plus in loans is what we the American people will not recover from GM and Chrysler so that means future generations of Americans will have to find a way to plug up that gap in future budgets. Also this means that this is yet another thing that we the American people have to find a way to prevent in the future as well as another thing that will be added to the national debt that will be permanent since it can’t be paid back, thus resulting in generational theft from future generations of Americans.

Just imagine if GM and Chrysler had of went into bankruptcy last November and December and how much better off, this nation would be financially in terms of deficits and debt. There are some people who will say that GM and Chrysler going into bankruptcy than would have be disastrous for the economy but I beg to differ because we the American people still would have been giving them either way it goes but at least we would have saved some billions from being wasted which is the case right now. This is why goals must be set for all money coming out of Washington and all government programs. Time will tell just how successful cash for clunkers was but if early signs are true, cash for clunkers was more successful for foreign car makers than American auto makers which it was intended to help.

Therefore, we the American people should be very skeptical of any government programs these days because of the fact that much of our tax dollars won’t be paid back to us or it wasn’t used properly in the first place. The auto industry, half of TARP and some of the stimulus money are all examples of just how bad the government has mismanaged us tax dollars in trying to fix the economy. What’s next people and how long will we stand for this mismanagement and abuse of our tax dollars? These are the questions indeed.

My Perspective: America’s Federal Deficit Grows as National Debt Soars

America’s Federal Deficit Grows as National Debt Soars

The federal deficit hit $1.38 trillion through August. Yes you hard me correctly. The federal deficit surged higher into record territory in August, hitting $1.38 trillion with one month left in the budget year. The soaring deficits have raised worries about the willingness of foreigners to keep purchasing Treasury debt. The Chinese, now the largest foreign owners of U.S. Treasury securities, have expressed concerns about runaway deficits. Treasury Secretary Timothy Geithner and other administration officials have sought to address those concerns by insisting that once the recession is over and the financial system is stabilized, the administration will move forcefully to get the deficits under control.

However, Republican critics contend the administration does not have a credible plan to address future deficits. Private economists worry the country could face the grim prospect of seeing interest rates soar in future years and the dollar weaken as foreigners dump their U.S. holdings. The Treasury Department said Friday that last month's deficit was $111.4 billion, below the $152 billion that economists expected. Still, the imbalance added to a flood of red ink already accumulated through the recession and massive spending needed to stabilize the banking system.

The Obama administration last month trimmed its forecast for this year's deficit to $1.58 trillion, from an earlier $1.84 trillion. The recovery of the banking system led to the reduced estimate as it meant the administration did not need to get an additional $250 billion in bailout support for banks. The $1.58 trillion estimate for the full budget year signals that that administration expects the imbalance in September to be around $200 billion. Still many private economists have slightly smaller deficit estimates for the full year but all agree that 2009 will be a record-holder by a large margin. The previous record deficit in dollar terms was $454.8 billion last year. The administration's revised budget forecasts issued last month also underscored how much the government's fiscal picture has deteriorated. It is now projecting the deficit over the next decade will total $9 trillion, $2 trillion more than its estimates from a few months ago.

The deterioration partly reflects the country's deep recession, the worst since the 1930s. That downturn has cut into government receipts and pushed up spending in such areas as unemployment benefits and food stamps, along with the cost of fighting wars in Iraq and Afghanistan. In addition, the government is using a $787 billion economic stimulus program passed by Congress last February to jump-start growth and is spending massive amounts from the $700 billion financial bailout package passed in October 2008 to stabilize the financial system.

The Treasury Department budget report for August showed the government collected $145.5 billion in revenues, a drop of 7.3 percent from August 2008. It marked the 16th consecutive month that revenues have been lower than the previous year, a string that reflects how much the recession, which began in December 2007, has cut into personal income and corporate taxes. Spending in August totaled $256.9 billion, down 4.5 percent from the year before. However, that comparison was misleading because the deficit last month was lowered by timing shifts which saw some payments shifted into July because Aug. 1 fell on a Saturday.

Primarily because of the timing shifts, last month's deficit was 0.5 percent lower than in August 2008. For the first 11 months of the budget year, spending totals $3.26 trillion, up 18.7 percent from a year ago, while tax receipts fell 16.1 percent to $1.89 trillion. The spending increases include the administration's estimate that $174.2 billion has been tapped from the financial bailout fund and another $84.9 billion went toward propping up mortgage giants Fannie Mae and Freddie Mac. In addition, federal spending on unemployment benefits totaled $104.7 billion through August, up from $41.4 billion in the year-ago period.

So as the U.S. government on Friday posted a smaller-than-expected $111.40 billion budget deficit for August, marking a record-matching 11 straight months of deficits, signaled worry on the markets as stocks plugged. The August budget gap was well below the forecasts of analysts polled by Reuters, who predicted a $152.0 billion deficit for the month. Nonetheless, the deficit was slightly smaller than the year-earlier budget gap of $111.91 billion, but this was due in part to calendar shifts that held down this year's August outlays. A Treasury official said some $25 billion in August 2009 federal benefit payments were shifted to July.

With one month to go in the 2009 fiscal year, which ends September 30, the deficit stood at a record $1.378 trillion, versus a same year-ago deficit of $500.53 billion. So while the White House budget office on August 25 forecast a $1.58 trillion deficit for the full 2009 fiscal year, implying that September -- in normal times a surplus month -- would produce a deficit of more than $200 billion. A September deficit would mark a record 12 consecutive months of deficits. Only three other times has the United States racked up 11 consecutive monthly deficits -- July 1982 to May 1983; May 1986 to March 1987; and May 1991 to March 1992.

So as the Treasury said receipts for August fell to $145.54 billion from $157.02 billion a year earlier, marking a 7.3 percent decline. For the first 11 months of the fiscal year, receipts are down 16.2 percent to $1.885 trillion from $2.251 trillion, as the economy struggled through the worst recession since the 1930s Great Depression. Outlays for August fell to $256.94 billion from $268.93 billion a year earlier. For the fiscal year to date, outlays, driven largely by spending on economic stimulus and financial rescue programs, are up 18.6 percent to $3.264 trillion.

So as America’s federal deficit grows, the national debt for the nation soars higher and higher. Deficit spending by the U.S. government tied an all-time record in August, the product of a recession that has added to a mountain of debt. So even if healthcare reform is passed, it won’t decrease the national debt but could keep the national debt from growing even further out of control. All the information regarding this year’s deficit should make all Americans worry because all though President Obama inherited this debt and deficit, his administration has added to it as well. Obama has been in office a little less than 9 months and much of the deficit for this year is a result of four things, the $700 billion TARP, the $787 billion stimulus package, the $435 billon omnibus bill and all the bailouts to the auto industry and other companies that the government now owns a part of if not all of.

Therefore o date, the fiscal 2009 deficit totals $1.378 trillion and it could hit as high as $1.58 trillion according to administration officials. As a stark illustration of what a lousy economy and a financial crisis did to Washington's pocketbook, the deficit for the first 11 months of 2008 was $500.53 billion. As mentioned before the biggest deficit for any fiscal year on record is $454.8 billion, rung up in fiscal 2008. Thus, the $1.580-trillion forecast was lower than the $1.84 trillion estimated in February but the new forecast, given three weeks ago by the White House, accompanied projections the U.S. will rack up larger-than-previously-expected budget shortfalls over the next decade, pushing the 10-year deficit forecast up by $2 trillion, to $9.05 trillion.

Over the next decade, America will add $9.05 trillion to its already ballooning national debt. This is not good news for future generations of Americans both born and unborn right now. The mounting deficits this year have added to the national debt, which totaled $11.8 trillion this week, and raised questions as to how all the red ink will be financed. The government sells bills, notes and bonds to pay for its operations and maturing debt. A rising supply of debt has led to concerns of poor auctions. Yet in recent weeks investors have sought refuge in low-risk Treasury’s, skeptical of the strength of an economic recovery. The 30-year bond sold Thursday with a bid-to-cover ratio of 2.92, exceeding the 2.54 ratio in the last long-bond auction, held Aug. 13. Because of the long recession, the outlook for inflation is tame, enticing buying for long-dated bonds; a rise in consumer prices erodes bonds' fixed interest payments over time.

"There is insatiable demand for Treasury’s now," said Brian Edmonds, head of interest rates at Cantor Fitzgerald LP in New York. "The incredible amount of supply doesn't matter for the time being." Friday's Treasury statement on the budget showed August 2009 federal government spending totaled $256.94 billion, compared to $268.93 billion in August 2008. Year-to-date federal government spending totaled $3.26 trillion, compared to $2.75 trillion in the first 11 months of fiscal 2008. Gross spending on the Troubled Asset Relief Program totaled $174.20 billion year to date. TARP was created late last year to rescue Wall Street and stem a financial sector meltdown. Spending for benefits to the nation's jobless totaled $100.70 billion. Since the recession began in December 2007, 6.9 million jobs have been lost.

Federal government interest payments on the national debt year to date were $189.39 billion. Defense spending ran at $599.82 billion. Veterans’ benefits were $87.21 billion. Social Security totaled $625.17 billion. The Treasury report said it bought $6.98 billion in agency mortgage-backed securities during August; year to date, purchases totaled $160.24 billion.
August federal government receipts totaled $145.54 billion, down from $157.02 billion a year earlier. Year-to-date federal government revenues totaled $1.89 trillion, compared to $2.25 trillion for the first 11 months of fiscal 2008. Individual income-tax receipts totaled $812.87 billion, compared to $1.01 trillion. Corporate taxes totaled $109.44 billion, compared to $250.72 billion.

With all of these numbers and information, it is clear that today’s federal deficits will continue to grow as the national debt could grow to $20 trillion by 2019 which is just shameful. Right now our national debt is $11.8 trillion and the Obama administration expects for it to grown $9.05 trillion over the next decade thus adding to the nation’s debt. This should make all Americans outraged. Who will pay for this mounting debt that seems to get larger and larger as the years go on? All of this makes me reflect on an article written years ago by Charlie Reese called 545 People, I encourage all of you to read it but in the beginning of it, Mr. Reese says:

Politicians are the only people in the world who create problems and then campaign against them..

Have you ever wondered, if both the Democrats and the Republicans are against deficits, WHY do we have deficits?

Have you ever wondered, if all the politicians are against inflation and high taxes, WHY do we have inflation and high taxes?

You and I don't propose a federal budget. The President does.

You and I don't have the Constitutional authority to vote on appropriations. The House of Representatives does.

You and I don't write the tax code, Congress does.

You and I don't set fiscal policy, Congress does.

You and I don't control monetary policy, the Federal Reserve Bank does.

One hundred Senators, 435 Congressmen, one President, and nine Supreme Court Justices equates to 545 human beings out of the 300 million are directly, legally, morally, and individually responsible for the domestic problems that plague this
country.

I excluded the members of the Federal Reserve Board because that problem was created by the Congress. In 1913, Congress delegated its Constitutional duty to provide a sound currency to a federally chartered, but private, central bank.

I excluded all the special interests and lobbyists for a sound reason. They have no legal authority. They have no ability to coerce a senator, a congressman, or a president to do one cotton-picking thing. I don't care if they offer a politician $1 million dollars in cash. The politician has the power to accept or reject it. No matter what the lobbyist promises, it is the legislator's responsibility to determine how he votes.

Those 545 human beings spend much of their energy convincing you that what they did is not their fault. They cooperate in this common con regardless of party.

Those lines there pretty much sum up why we have federal deficits and a national debt that is so out of control that anyone who is currently in D.C. knows how to fix. Well let me take that back, there are a few Congressional leaders who are against deficits and the mounting national debt but they are just a select few. Therefore we as a nation must ask ourselves what type of future are we living for generations of Americans if our deficits are expected to grow to $9.09 trillion over 10 years thus creating a national debt of nearly $20 trillion by 2019. What type of future will we create with generations of Americans having to pay for what we do or use today? What programs or future spending projects will we prevent future generations of Americans from having due to them worrying about finding ways to pay off the huge deficits and debt that we have created today? America we have to fix this problem because the future looks gloom for future generations of Americans and as some have called it, it is truly generational theft when hearing these numbers and what the future deficits and debt might look like 10 years from now if something isn’t done now.

My Perspective: National Deficit Continues to Plague Our Nation

America’s national debt continues to plague our nation and as much as President Obama tries to deal with it, his own administration original deficit forecast has been increased by nearly 2 trillion. The White House reported last week that they would boost their 10-Year deficit forecast to $9 Trillion and this was seen as a major issue to many fiscal hounds such as me that we as a nation are continuing to recklessly spend. Clearly this is why people like me fought against legislation such as TARP, the stimulus package and the omnibus bill because we saw that it contained lots of waste and pork that isn’t beneficial to our economic recovery or the future of our nation’s economy. Bailouts to financial institutions and the auto industry were seen as bailing out companies for not living within their means. Plus the fact that the auto industry got loans that were supposed to be paid back to us the American people but due to the fact they went into bankruptcy, they don’t have to pay back the loans and the fact that they got even more money to fund their efforts to come out of bankruptcy has made many Americans upset as well and worried about the ballooning deficit of our nation.

Therefore it is clear that America’s national deficit is a problem because we have not lived within our means as a nation and we have continued to spend recklessly on things that won’t make our nation better for the long term. America’s fiscal responsibility needs to be practiced now because it is as if we are trading our long term success for short pleasure and that is not the stewardship of our nation. Instead of us being a nation that understands our past in order to make sure we don’t repeat those mistakes in the present so that we can make the future better, we seem to have not learned to understand our past which is why we continue to repeat it for short term pleasure. Our nation’s national deficit has continued to grow under each President but not at the rate it has grown in the last year and half.

One can understand that our government has to spend in order to get out of the recovery but from all the data that is out from economists, none of them can say that it is because of government spending or government efforts that the recovery is near. So with that said, it is clear that the policies under the Bush and Obama administration were flawed and had little to no impact on our economic recovery. So the fact that the Obama administration will raise its forecast for the 10-year federal budget deficit to about $9 trillion from $7.1 trillion, a senior administration official said should not surprise anyone because it just shows that Obama hasn’t learned to master our nation’s deficit yet alone practice fiscal responsibility.

While Obama has tried to show that he is fiscally responsible with PayGo that has not oversight over TARP, the stimulus bill or omnibus bill should tell everyone just how fiscally responsible Obama is. Then the notion to weed out $102 million in government waste from governmental departments is chump change when one looks at our national budget and what each governmental department gets to fund its project. So while Obama is trying, it is not enough fiscal responsibility because he hasn’t reigned in Congress yet. The good news is that the White House will try to use the new estimate as extra ammunition as it seeks a health-care overhaul in Congress. The administration says its policies are aimed at driving down long-term medical costs. The estimate reflects the grim long-term U.S. fiscal outlook, as baby boomers retire in increasing numbers and costs continue to soar for federal entitlements, particularly health-care programs such as Medicare.

However the latest measurement puts the White House in line with previous updates from the Congressional Budget Office. The change stems in part from downward revisions of projected economic activity since late 2008, when the administration began putting together its latest forecast. Earlier this week, the administration said it would shrink its estimate for the 2009 deficit to about $1.58 trillion from $1.84 trillion. That is because of generally lower-than-anticipated costs for various financial-sector bailouts. But CBO's estimate could vary significantly, some budget experts say. By any measure, the 2009 budget deficit is expected to be the widest since World War II as a percentage of the economy.

The White House will revise the 10-year budget deficit from $7.1 trillion to $9 trillion and officials at the White House Office of Management and Budget (OMB) confirmed the enormous debt revision late Friday afternoon, hours after President Obama left for a 10-day vacation. In May, the White House was projecting a 10-year deficit nearly $2 trillion less than what is now forecast. Since then, the unemployment has gone up steadily, hitting 9.5 percent in June before dipping one-tenth of a point to 9.4 percent in July. Unemployment is widely expected to rise this fall, and some economic experts believe the rate will not fall until next summer. Meanwhile, the mortgage crisis continues to hit home owners in their pocketbooks. This week the Mortgage Bankers Association reported that foreclosures would not fall until the end of 2010.

“The new forecasts are based on new data that reflect how severe the economic downturn was in the late fall of last year and the winter of this year,” an official told Reuters. Federal Reserve Chairman Ben Bernanke on Friday said prospects for growth appear good, but that the recovery will take a long time. The increased deficit projections come after efforts by the Bush and Obama administrations to bail out the financial system and stimulate the broader economy. The Bush administration committed hundreds of billions of dollars to prop up Fannie Mae and Freddie Mac, the two housing giants. In October, as the financial crisis deepened, Congress passed the $700 billion financial rescue package. In February, Obama signed a $787 billion fiscal stimulus package with the effort to save or create 3.5 million jobs.

While those efforts have led to greater deficits, the broader effects of the recession -- which began in December 2007 -- are also taking their toll. Decreased tax revenue and lower corporate profits are also contributing to higher deficits. The deficit projections will likely spark questions about the Obama administration's efforts to bring down long-term deficits, a key cause for concern in the contentious debate over healthcare reform. Republicans have criticized Obama and congressional Democrats since early this year for pursuing policies that have caused wider deficit projections. Conservative and centrist Democrats are also wary of efforts that commit additional money without bringing down the national debt.

Meanwhile, foreign countries, particularly China, have raised questions about the deficit projections and the ability of the United States to continue to finance its debt. This week’s report is also expected to show that the deficit for the year is roughly $200 billion less than expected. But this is because the administration no longer expects to need money it had set aside as a reserve in case banks needed further help this year. Thus the administration was planning more money to be thrown toward the banks while many American families continue to suffer while unemployment continues to be above 9% in this nation. This is why the national deficit is not just about healthcare reform but it is also about social security reform as well as fiscal responsibility on Capitol Hill. If our nation doesn’t practice fiscal responsibility now than when will we because we are hurting future generations of Americans from being able to spend to improve their present and the future they hope to create but instead they might be paying off much of the debt that we have accumulated.

Our nation will be plagued by our national deficit as long as we continue to ignore it and not pay it off as we need too. We need to do better on this issue if we are to leave this nation better than how we found it. America’s national deficit is not a Republican or Democrat problem but it is an American problem. The national deficit isn’t a conservative or liberal issue but it is an American issue. Therefore it is time for all Americans and all politicians on Capitol Hill make efforts toward decreasing our national deficit once and for all.

Deficit grew by $181 billion in July-- By Walter Alarkon

Posted: 08/09/09

Bailouts for financial firms and billions in tax revenue lost because of the recession drove the deficit to a record $1.3 trillion in July, according to the independent Congressional Budget Office (CBO).

Tax receipts that have fallen due to the poor economy and increased spending to save car companies, banks and mortgage firms were major contributors to the federal deficit, according to CBO, which provides official budget numbers for Congress. The federal deficit grew by another $181 billion in July.

Falling tax receipts and increased spending on bailouts for auto companies and the financial sector and for the economic stimulus package added to the deficit, according to CBO.

Spending through July of 2009 has increased by $530 billion, which is 21 percent over the same period in 2008. The bailout money for banks, Freddie Mac and Fannie Mae accounted for almost half of the spending increase. Unemployment benefits have more than doubled, Medicaid spending has grown by a quarter and Medicare spending has increased by 11 percent.

Tax revenue for the first three quarters of 2009 has fallen by approximately $350 billion, or 17 percent compared to the same period last year, due mostly to the effects of the recession on payroll, income and corporate taxes. A third of the decline is due to tax breaks in the stimulus, including the middle-class tax cut that President Obama campaigned on during last year's election.

The independent budget scorekeeper has projected the deficit to reach $1.8 trillion by the end of the fiscal year, Sept. 30. The deficit in 2008 reached $455 billion, which was a record at the time.

The latest deficit projections come as Democrats in Congress and the White House are pushing for healthcare reform criticized by Republicans as too costly.

House Speaker Nancy Pelosi (D-Calif.) stressed during a town-hall meeting in Colorado this week that the healthcare bill won't add to the deficit or restrict benefits and instead will increase access to care. But lawmakers have yet to settle on a way to pay for the bill, expected to cost roughly $1 trillion over the next decade. Pelosi has supported an income surtax on the highest earners, those making more than $280,000, while senators are considering a tax on insurance companies that offer expensive health plans.

Sen. Judd Gregg (N.H.), the top Republican on the Budget Committee, said that Democrats in Congress aren't doing anything to address the record deficit and are instead pushing ahead with “wildly expensive” healthcare legislation.

“To allow the deficit to hit these previously unthinkable levels – while still planning to implement massive new spending programs – shows an incredible lack of fiscal responsibility, especially toward the future generations who will be saddled with the consequences of today’s actions,” Gregg said.

One poll released last week suggests that the GOP attacks are starting to work. A Rasmussen survey of likely voters found that 71 percent believe Obama's policies have increased the deficit. While most -- 54 percent -- blamed the recession that started during the Bush administration for the country's fiscal situation, 39 percent blamed Obama's policies.

America’s National Debt Is Our Worst Nightmare

In the wake of this near economic catastrophe, it is amazing how many economic experts and political pundits have tried to give the expression that America’s worst nightmare is the deregulation of Wall Street or healthcare. However the reality is America’s worst nightmare is its national debt. Now there is a difference between national debt and a deficit because a deficit is usually associated with a yearly budget and only means that money that an organization or government has overspent for the current year while debt is the amount of money that an organization owes to both itself and other entities. Simply put suppose you want to spend more money this month than your income. This situation is called a "budget deficit". So you borrow (ie; use your credit card). The amount you borrowed (and now owe) is called your debt. You have to pay interest on your debt. If next month you don't have enough money to cover your spending (another deficit), you must borrow some more, and you'll still have to pay the interest on the loan. If you have a deficit every month, you keep borrowing and your debt grows. Soon the interest payment on your loan is bigger than any other item in your budget. Eventually, all you can do is pay the interest payment, and you don't have any money left over for anything else. This situation is known as bankruptcy.

Each year since 1969, Congress has spent more money than its income. The Treasury Department has to borrow money to meet Congress's appropriations. We pay interest on that huge debt. And now the Treasury is having trouble finding lenders! In fact the annual deficit is this year's spending minus this year's income. If we spend $900B with income of $600B in one year, the annual deficit is $300B. That makes the national debt go up by $300B. The annual deficit is how much the debt increases each year. On any day we can ask how much the annual deficit was over the preceding year and find it by subtracting the national debt a year ago from what it is now. Just take a look at the financial crisis tab from this last year and a half that totaled $5 Trillion. The financial crisis took a heavy toll on the US in just a few months. According to an article published on Forbes.com “CreditSights, a research firm in New York and London, [states that] the U.S. government put itself on the hook for some $5 trillion, so far, in an attempt to arrest a collapse of the financial system.”

The article goes on: “The Fed also took on tens of billions in debt, including $29 billion in debt of Bear Stearns, and made $60 billion of credit available to American International Group (nyse: AIG - news - people ). It is committing $22.5 billion to set up a special purpose vehicle to manage some of AIG’s residential mortgage-backed securities, and it is financing $30 billion of a second fund to hold $70 billion of multi-sector collaterized debt obligations on which AIG wrote credit default swaps. The Treasury, in addition to the $700 billion raised in the Emergency Economic Stabilization Act, agreed to guarantee money market funds against losses up to $50 billion, will inject $40 billion of capital into AIG and is backing the conservatorship of Fannie Mae (nyse: FNM - news - people ) and Freddie Mac (nyse: FRE - news - people ), to the tune of $200 billion. The FDIC, meanwhile, is guaranteeing $1.5 trillion of senior unsecured bank debt.” Now that doesn’t even include the amounts of money thrown toward Chrysler and General Motors in the form of loans but that eventually became debt due to the fact they went into bankruptcy and don’t have to pay back the loans. However, it goes not to mention that General Motors and even a part of Chrysler received additional money from the government even after they went and emerged from bankruptcy so the government owns a part of both companies but a huger chuck of General Motors than Chrysler.

So America has become more a debt 'junkie' - - than ever before with most people stating the national debt at $11 trillion but that doesn’t include all of the nation’s nation such as Medicare and Medicaid, Social Security and other things. Therefore according to the National Debt Awareness Center, the total debt of our nation is $57 Trillion and the highest debt ratio in history. That's $186,717 per man, woman and child or $746,868 per family of 4, $32,104 more debt per family than last year. Last year’s total debt increased $3 Trillion, 8 times faster than GDP. External debt owed foreign interests increased $1.2 Trillion; 79% ($45 trillion) of total debt was created since 1990, a period primarily driven by debt instead of by productive activity.
And, the above does not include un-funded pensions and medical promises. So two (2) great questions: Can the production of debt forever replace the production of goods and savings? and Can Americans forever borrow their way to prosperity?

The easy answer to those questions is “NO WAY!!” The Grandfather Economic Reports, which is a series of picture reports of economic challenges to the future of families and their children, compared to prior generations shows exactly how our economic problems have emerged and what future problems lay ahead for our nation. That is why the Federal Government Debt Report covers just the federal government debt of $10.2, which is $34,868 per child in FY2008 but is at $11 Trillion plus within 8 months of 2009. That is why the National Debt Awareness Center covers all U.S. debt, called Total America Debt (the sum of all recognized debt of federal, state & local governments, international, private households, business and domestic financial sectors, including federal debt to trust funds). Total Debt in America is now $57 Trillion, or $186,717 per man, woman and child. There is $57 TRILLION of DEBT in America, and it is rising rapidly and the economy is 2-3 times more debt-dependent with $36 Trillion DEBT EXCESS compared to prior debt ratios. One graphic on the National Debt Awareness Center website is scary is a chart that shows trends of total debt in America (the red line, reaching $57 trillion in 2008 vs. growth of the economy as measured by national income (blue line). (adjusted for inflation). That debt increased $3 Trillion in the past year. Which line goes up faster, the red debt line or the blue net national income line? Answer: the debt line.

And, that debt line is going up faster and faster than national income! Right? (maybe, like this chart, your own personal or business debt is also going up faster than your own income - - possible?) As mentioned, debt is here defined as all U.S. debt (sum debt of federal and state & local governments, international, and private debt, incl. households, business and financial sector debts, and federal debt to trust funds). Other websites such as National Debt show for the period 1957 to mid 1970s, total debt was increasing close to the growth rate of national income, despite war debt for WW II, Korea and Vietnam. But, in the last several decades total debt has zoomed up, up and away--growing much faster than national income. At the beginning of 2009, total debt was $57 Trillion, which $44.2 trillion private household/business/financial sector debt PLUS $12.8 trillion federal, state and local government debt.

Think about it, last year's total debt of $57 Trillion was 11 times higher than the $5 Trillion debt in 1957 both measured in inflation-adjusted 2008 dollars. Last year's total debt increased $3 trillion, yet national income increased just $328 billion. Federal government debt included added debt owed trust funds had increased $1.5 trillion (16%), household debt increased $56 billion, business debt increased $502 billion (5%), state & local government debt increased $48 billion, and domestic financial sector debt increased $1 trillion (6.4%). Each sector reached a new, all-time record high. It took $9 of new debt to produce but $1 of added national income - a new record. In 2008, 38% ($1.1 Trillion) of the total debt increase was $3 Trillion which is owed to foreign interests and that is up 110% since 2003. Last year's total debt per person was $186,717 (up $11,563 over prior year's $175,154); this compares to $29,722 in 1957 (measured in inflation-adjusted 2008 dollars). Last year's debt per family of four increased by $32,104, to $746,868.

The website U.S. Budget Watch shows debt growth in inflation-adjusted dollars and shows debt as a percentage of net national income which is termed the 'debt ratio'. On its website, it also shows that the 2008 debt of $57 trillion was 499% of national income; the debt ratio in 1957 was 186%. If 2008 debt had been at the 1957 debt ratio then 2008's debt would have been $21 trillion, not $57 trillion which indicates excess debt in America today of $36 trillion. The U.S. Budget Watch website has graphs and charts that show how the debt ratio data plots are nearly flat during the first half of the years shown, indicating debt was growing at approximately the same rate as the economy not faster than the economy. This proves America's economy can grow without increasing debt at a faster pace because it has in the past. Still one has to look at what happened to that trend in the middle of the 1970s where the debt ratio zoomed upward, faster and faster, indicating debt growth way beyond general economic growth - with a new, record high debt ratio each year.

Now if the economy performed with less debt each year per dollar of national income growth, meaning better debt productivity, then we would see a downward trend in debt ratio. But, we don’t and each year more and more we see our debt ration rapidly soar upward. This means the economy has been performing with less debt productivity each year, meaning it requires more and more debt each year to produce a dollar of national income than the year before. Like a drug junkie, the economy demands the generation of more and more debt each year to survive. The debt ratio has now reached 470% of national income which is an all-time high, and shows no sign of even slowing its upward march. The excess debt is even higher than the $36 trillion excess shown on the National Debt Awareness Center website because if a nation's economy were structured to become more productive such that it could grow without increased debt than why can America not grow by normal population and savings growth and labor and equipment productivity without growing debt ratios higher and higher?

More data to look at is that in 1957 there was $1.86 in debt for each dollar of net national income, but in 2008 there was $4.93 of debt for each dollar of national income which is up 165%. This also means this extra $3.08 of debt per dollar of national income produced zilch extra national income. Even worse, in 2008 alone it took $9 of new debt to produce one dollar of national income. So what kind of 'so called productivity' is that? The answer is “Negative Productivity.” Since 1990, 85% of today's domestic financial sector debt was created, as it increased by a factor of 6 times (2.5 times faster than the economy); household debt increased 60% faster. In 2007 there was a new, all-time record high in debt ratios of the household, business, and domestic financial sectors which also records debt ratios owed to trust funds. In FY 2006 the federal government's bite out of trust funds of $328 billion set another record, bringing total trust fund debt to $3.6 trillion, including $1.8 trillion siphoned from the social security trust fund. Average credit-card debt of US households was $9,300 in 2004, up from $2,966 in 1990, according to research firm CardWeb.com that's 214% more debt. The Federal Reserve reported 2008 household credit debt of $2.6 trillion, 18% higher than 2004. Even students learn how to go into debt up to their necks. According to April 2008 Money magazine, not counting borrowing by parents, 2007 college students graduated with an average student loan debt of $21,900 which is a 96% increase after adjustment for inflation since 1993. For those who graduated from a 4-year university with $15,000 or more in debt there was a 20% default rate during the following 10 years. Additionally, student credit card debt soared as universities promote credit cards issued by agencies who kick-back to them. Also since 1990 it is clear the economy was 'driven' almost entirely by the biggest injection of new debt in history, which produced a much diminished lower return in national income per dollar. Just as one hooked on drugs needs ever increasing amounts of drugs to 'survive', it appears America needs ever increasing amounts of new debt to eke out diminishing amounts of growth which is even with 2 wage earners per family. America's total private and government debt is at least 100% higher compared to debt ratios of the recent past.

Therefore the international ownership of U.S. debt has soared to now $13.6 trillion plus. "Foreign interests have more control over the US economy than Americans, leaving the country in a state that is financially imprudent. More and more of our debt is held by foreign countries, some of which are our allies and some are not. “The huge holdings of American government debt by countries such as China and Saudi Arabia could leave a powerful financial weapon in the hands of countries that may be hostile to US corporate and diplomatic interests,” said David Walker, the US comptroller general. (23 July 2007. http://business.timesonline.co.uk/tol/business/markets/united_states/article2120735.ece) America’s Total Debt which is $57 Trillion can be broken down into two parts: $13.6 Trillion owed to foreign interests and $43.4 Trillion owed domestically. From $6.4 trillion of external debt in 2003 to $13.6 trillion in 2008 that is over 100% increase in just 5 years of more than $7 trillion. The $13.6 trillion in 2008 was $3.3 trillion ($32%) higher than 2006, showing a quickening - and representing nearly the increase in America's total debt in 2008.

According to the Federal Government Debt Report federal debt was $10.6 Trillion at the end of 2008, including $3.2 Trillion owed by the U.S. federal government to foreign interests which represents 49% of all Treasury bonds & notes, compared to 15% in the late 1980s. As of 2004, according to Gillespie Research & the Federal Reserve, U.S. financial assets owned abroad included 13% of all stocks and 27% of corporate bonds, and foreign investors & central banks also owned 13% of U.S. government agency debt up from 5% in 1995. However the National Debt website has a graph that shows a rapid quickening of external debt since 2004, meaning the foreign ownership share of stocks, bonds, agencies, etc. that is today higher than ever. Consider this, Fannie Mae and Freddie Mac are the largest suppliers of mortgage funds in America, borrowing extensively on the open market and it has been reported two-thirds of their $1.5 trillion outstanding debt is held by foreign investors, up from one-third in 2002 which is dangerous with a long-term falling dollar exchange rate. Still that was prior to the U.S. government took over majority ownership of Fannie Mae and Freddie Mac but nothing has been said of the foreign investors ownership of the companies and some sources believe they pulled out which caused Fannie and Freddie to melt down to a degree.
Additionally, foreign interests own real estate and factories and some would be surprised to learn that the well-known and respected California-based Pimco, the world's largest bond fund, that many believe is an American firm is in fact a unit of Allianz AG, a German firm. As reported in the International Trade Report, in 2008 the U.S. had a total merchandise trade deficit of $821 billion, while Japan & Germany produced a cumulative trade surplus of $301 billion ($36+$265). That's a whopping $1.1 trillion worse relative trade performance for the U.S., in JUST ONE YEAR - against just 2 nations that also are high-wage nations. And, Japan and Germany actually import a higher percentage of their oil needs than does the U.S., and still relative U.S. trade deficits go on, and on, continually building soaring international liabilities to the benefit of foreign entities, because the American economic system 'refuses' (or does not know how) to produce enough of its needs.

External debt and trend of foreign holdings of federal government debt is covered more extensively in the Total America Debt Report that can be found on the National Debt Awareness Center website. Now we as Americans should not be mad at foreign interests because we are the ones borrowing from others so we can consume beyond our own production and savings, thereby creating unprecedented debts and trade deficits PLUS excessive government spending. While America's debt used to be nearly all owed domestically, increasingly huge portions are now controlled by foreign interests. America is less and less independently in control of its economy and, this is happening on OUR WATCH, not a nice bequest we are creating for our children and grandchildren.

So while facing this accelerating debt challenge, America is already the world's largest international debtor with $13.6 Trillion external debt owed foreign interests. $8.2 trillion in cumulative trade deficits in goods have occurred since 1985, as international trade deficits explode to new records and America depends more and more on the production and savings of others than on itself (see International Trade Report); and, with each citizen carrying on his/her back more state & local government employees than ever before, because their headcounts again increased faster than general population growth; and, personal savings plunged to record lows; and, real median family incomes (Family Income Report) ceased their solid increases after debt ratios took off. With household debt at the highest ratios in history, whereas in previous times one bread winner per family was sufficient to provide for the family, build savings and reduce get-started debt loads - - the family now allocates the 2nd bread winner plus more debt and zero savings and less time for the children to do the same. Now in previous times students graduated from college debt-free to themselves and their parents, because many worked their way via part-time jobs while minimizing consumptive spending but that no longer happens or happens very seldom now days.

The period know as the "financialization" of the economy by debt includes increasing domination by the nation's financial sector of the total capitalization based weight of the S&P index which is a topic discussed as a part of naming debt causes. Still more families than ever before, with every possible adult member in the work force, try to make-up the mounting pressure by turning to more debt and negative savings while more business debt is accumulated despite paying out fewer dividends to shareholders, as well as a much smaller manufacturing base. So with the lowest personal savings rate on record, with the federal government relying more and more on foreign entities to lend it funds to operate and prop up its currency, and with run-away trade deficits, where will this debt monster lead? Does America simply borrow savings of non-Americans until either they stop lending or until America has mortgaged or sold-off all its assets to others? How can this direction be changed - - or am I the only one who does not believe individuals and a nation can, forever, borrow their way to guaranteed continual prosperity and security? Also, am I the only one who believes these trends represent major negatives regarding the future of our children and grandchildren - - in many, many ways?

Well the end game of debt expansion is not here yet. Esteemed Economist Ludwig von Mises stated the endgame brought on by reckless expansion of credit (debt): "There is no means of avoiding the final collapse of a boom brought about by credit (debt) expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit (debt) expansion, or later as a final and total catastrophe of the currency system involved." Does anyone wish to offer guarantees that Dr. von Mises is wrong? Does anyone believe these debt trends can continue forever - without dire consequences?

If we are to prove Dr. von Mises wrong and if we are to make sure that these trends don’t continue forever there are tons of things we must do because this is not a way to run an economy for our children and grandchildren by debt, debt and more debt. There can be little doubt that the only way energy (for example) will be better conserved with reduced dependence on foreign interests is with significantly higher economic (prices) costs and lower consumption. The same goes for debt, a free market (without central-planning via the Federal Reserve to manipulate interest rates) setting significantly higher economic costs (higher interest rates, elimination of tax subsidies on debt, higher bank reserve ratios, etc.) to debtors, until debt ratios fall back more in line with America's past. Perhaps payroll taxes for social security and Medicare should be eliminated with its revenue loss (plus the gap missing for the future) transferred to the equivalent tax on energy and on debt. The U.S. is more debt-dependent than ever and this is not good whatsoever.

America’s national debt is our worst nightmare and this goes beyond just politics but this is economics particularly the economics of deficits and debt. One part of America’s debt that is always talked about but never really discussed more in depth in terms of debt but more so as a political issue that needs to be resolved is Social Security. Currently, contributions to Social Security are greater than payouts because members of the large baby-boom generation are currently in their prime earning years. But the baby-boomers are about to start retiring. In fact, an increase in the Social Security tax was passed just to help fund their retirement. This money should be saved/invested in order to make it easier for the younger generation to support the baby-boomers after they retire. How could this happen? If the rest of the government budget was in balance then the current excess of Social Security contributions over payouts would result in more investment.

Here's how a surplus produces investment: an excess of Social Security contributions over payouts (assuming the rest of the government budget in balance) would be used to reduce outstanding debt. That means buying back bonds. That means more money in the hands of former bond-holders, who clearly were interested in saving the money, not spending it. To save that money they'd buy corporate bonds or stock, or put in the bank, etc., all of which would encourage more investment in real, productive assets. Investment now means increases in productivity in the future. A more productive younger generation would have an easier time supporting the soon-to-be-large number of retirees.

That's why it's important to look at the real deficit that does not include Social Security contributions in excess of payouts. The current deficits indicate that the government is spending far in excess of revenues, thereby more than offsetting intended Social Security saving. And, as the annual total deficit graph shows, the situation is not improving, even after a recession. The reasons for the annual total deficit continuing at near-record levels even after a recession are not hard to find: (1) huge tax cuts; (2) Iraq & Afghanistan war expenditures. Still Social Security is not part of the Federal Budget general fund. It is a separate account and has its own source of income. Social Security payments do not go into the general fund, they go in the Social Security trust fund, and should NOT be counted as general revenue. The trust fund is supposed to be used to pay future benefits. But currently, there is more being paid into the Social Security Trust Fund than is being paid out to beneficiaries. What's left over is routinely being "borrowed" and used as if it were general budget revenue. Government agencies are using that money and are promising to pay it back (IOUs). All of the money in the Social Security Trust Fund has been spent! That's part of the National Debt. So Social Security is just a very large tax collection tool.

So we have to beware the term "Social Security Surplus"; there is no such thing. Social Security is a Ponzi Scheme, there is never more in the Trust Fund than will ever be needed. Social Security will need to be fixed. Here is a debate page to discuss it. And here is more information on the Root Problem with Social Security. Still, social security, Medicare and Medicaid are all parts of the problem our nation’s national debt. They are not usually included in most debt calculations but the truth of the matter regardless if you believe the nation’s debt is at $11 Trillion plus and counting or $54 Trillion plus and counting, we have a serious problem in this nation when it comes to debt and this is our worst nightmare as we don’t deal with it head on right here, right now. The more time that is wasted on dealing with the national debt, the larger it grows and more out of control it gets. Now is the time to deal with it so we don’t continue to pass much of it along to our children, our grandchildren and our grandchildren’s children. We must change our society and the way we deal with things in this nation.

America’s worst nightmare is our national debt and it only continues to get scary and scary with each passing second, minute, hour, day, week, month and year. Let’s fix it now once and for all.

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NOTABLE QUOTES
"For society as a whole, nothing comes as a 'right' to which we are 'entitled'. Even bare subsistence has to be produced.... The only way anyone can have a right to something that has to be produced is to force someone else to produce it... The more things are provided as rights, the less the recipients have to work and the more the providers have to carry the load." Thomas Sowell, quoted in Forbes and Reader's Digest.

According to Mr. Kneeland, "...all dollars come from the people. Where do [you] think Coca-Cola gets the money to pay its taxes, Exxon gets its money to pay the Exxon Valdez fines, Denny's gets the money to pay its Justice Department fines, or even Microsoft gets the money to defend itself? It all ultimately can come from only one place, and that's from individuals." ED: When you buy a product, the price of that product has to cover ALL the costs to get that product to you.

"A politician cannot spend one dime on any spending project without first taking that dime from the person who earned it. So, when a politician votes for a spending bill he is saying that he believes the government should spend that particular dollar rather than the individual who worked for it." Neal Boortz.

"There is no such thing as government money - only taxpayer money." William Weld, quoted in Readers Digest.
"We hear sad complaints sometimes of merciless creditors; whilst the acts of merciless debtors are passed over in silence." - William Frend, 1817

"I place economy among the first and most important virtues, and debt as the greatest of dangers to be feared." - Thomas Jefferson"

"The decline of great powers is caused by simple economic over extension." The Rise and Fall of the Great Powers, by Paul Kennedy

"There is no means of avoiding the final collapse of a boom brought about by credit (debt) expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit (debt) expansion, or later as a final and total catastrophe of the currency system involved." - Ludwig von Mises

No generation has a right to contract debts greater than can be paid off during the course of its own existence." - George Washington to James Madison 1789

"Growing domestic and international debt has created the conditions for global economic and financial crises.” Bank for International Settlements June 2005

Sources:
Deficits Do Matter www.deficitsdomatter.org

Federal Budget Spending and National Debt Awareness Center www.federalbudget.com

National Debt http://zfacts.com/p/461.html

U.S. Budget Watch--The Committee for a Responsible Budget www.usbudgetwatch.org

U.S. National Debt Clock www.usdebtclock.org