US Budget Deficit to Reach $1.2 trillion

[Æmeric]

WASHINGTON — The federal budget deficit will rise to a record $1.2 trillion this year, and a package of new spending increases and tax cuts planned by President-elect Barack Obama and congressional Democrats will push that figure higher, the Congressional Budget Office reported today.
In the first official reckoning of the damage caused by the severe recession, the report paints a bleak picture for 2009: a 2.2% drop in the size of the nation's economy, a jump in the jobless rate to 9.2% in early 2010, a 14% drop in home prices and a 1% decline in consumption.

The year-old recession, brought on by the slump in housing and its impact on financial institutions, "will probably be the longest and the deepest since World War II," the CBO said.

The budget deficit also will be the largest since World War II, and deficits will continue to haunt the federal government for the next decade, totaling $3.1 trillion. That's without any action by Obama and Congress to fix the economy, which will cause deficits to rise, the CBO said.

The report predicted that revenue will drop by $166 billion this year, or 6.6%. Spending will increase by more than $400 billion because of the government's takeover of the Fannie Mae and Freddie Mac housing corporations and the federal bailout of financial institutions.

Read the rest of the article here. (http://www.usatoday.com/news/washington/2009-01-07-budget_N.htm)


Zero interest rates & massive deficits. What next, price controls? It is only a matter of time before 1 US$ will equal 1 Z$.:(

[Psychonaut]

Zero interest rates & massive deficits. What next, price controls? It is only a matter of time before 1 US$ will equal 1 Z$.:(

And people wonder why I'm buying so much gold and silver...

[Æmeric]

The projections just keep getting worst:



In a measure of how quickly its options are shrinking, the United States is about to embrace an economic theory that was widely thought for most of the last generation to have been discredited: the idea that great bursts of deficit-funded government expenditure can jolt an economy back to growth.

And the nation is poised to put this theory to the test on a scale untried in peacetime by any developed country on Earth.

President-elect Barack Obama will soon unveil a package of tax cuts and spending increases that, combined with already planned spending, would push Washington's 2009 deficit to between $1.5 trillion and $2 trillion -- more than 10% of the economy's output. And he will argue that this tidal wave of federal expenditure should continue into next year, and perhaps beyond.

Only during World War II did U.S. government expenditures account for a greater share of economic activity, according to federal statistics. That's also true for virtually every other developed country.

Continue Reading: (http://www.latimes.com/business/la-fi-econ11-2009jan11,0,2730452.story)

The difference between now & WWII is that the US was the greatest manufacturing power on Earth, we have since outsourced our manufacturing capacity offshore, mainly to China. And we exported oil during WWII, now we import more then 1/2 of our oil consumption.

[TheGreatest]

The projections just keep getting worst:




The difference between now & WWII is that the US was the greatest manufacturing power on Earth, we have since outsourced our manufacturing capacity offshore, mainly to China. And we exported oil during WWII, now we import more then 1/2 of our oil consumption.


This is wealth 101 but what do we expect when most of our politicians are Ivy-League Socialists with Lawyer degrees?
Right now we're not making a whole lot of money in the United States. Our dollar is artificially strengthen because of the whole Petro Dollar. But other than that, we're a service economy like Haiti, Venezuela and Angola.

There is no money being made when 99% of the population is working at telecommunications, McDonalds and massage parlors. This is all a transfer of wealth from one hand to another. This is the reason why under service economies the whole phrase "the rich get richer and the poor get poorer" comes into light.



We live in a real Orwellian society in which we demonize the past. Well despite all those ''racist white men'', there was no income tax back then, an industrial worker could afford his own home and raise a family on a single salary.

[SwordoftheVistula]

the report paints a bleak picture for 2009: a 2.2% drop in the size of the nation's economy, a jump in the jobless rate to 9.2% in early 2010, a 14% drop in home prices and a 1% decline in consumption.

There's the problem right there, the economy is dropping 2.2%, unemployment going up to 9.2%, and consumption only falling by 1%. As long as we continue to consume more than we produce, we're going to go deeper into debt.