White House paints a grim fiscal picture

[Delirious]

WASHINGTON (Reuters) - The White House will predict a $1.6 trillion U.S. budget deficit in the 2010 fiscal year, a fresh record and the biggest since World War Two as a share of the economy, a congressional source told Reuters on Sunday.

The grim forecast adds to the challenges facing President Barack Obama, who is emphasizing a message of fiscal discipline but is also seeking stimulus measures to boost the struggling economy in the near term.
Obama's budget proposal, which will be released at 10 a.m. EST on Monday, will predict a narrowing of the deficits to $700 billion by fiscal 2013 before they gradually rise back to $1 trillion by the end of the decade, the Capitol Hill source said.
He will submit his spending blueprint for the 2011 fiscal year that begins October 1 and runs through September 30 next year.
Obama is trying to strike a balance between long-term deficit reduction and easing the pain of double-digit unemployment through proposals such as tax credits to encourage business hiring and tax breaks for middle class families.
He is to deliver remarks on the U.S. fiscal situation at 10:45 a.m. EST.
Criticized by Republicans as a big spender, Obama used his State of the Union address last week to tell Americans he would dig the country out of a "massive fiscal hole."
That hole is even deeper than previously believed, according to the estimate by the White House's Office of Management and Budget.
The estimate for the current 2010 fiscal year that ends September 30 is significantly higher than the $1.35 trillion figure forecast by the nonpartisan Congressional Budget Office last week.
Despite the difference, both estimates indicate that the deficit will continue to hover near 10 percent of gross domestic product, a level not seen since World War Two, when measured as a percentage of the economy.
Last year, the government posted a $1.4 trillion deficit, equivalent to 9.9 percent of GDP.

THREE-YEAR FREEZE WON'T BE ENOUGH
In his budget, Obama will propose a three-year freeze on some domestic programs to save $20 billion next year and $250 billion over the coming decade.
But that will not be enough to get deficits down permanently to the 3 percent of GDP that most economists consider sustainable.
Deficits are projected to fall as the economy recovers, but they will still average roughly 4.5 percent of GDP over the coming decade, according to the estimate.
Deficits are expected to rise again toward the end of the decade due to the increasing cost of retirement and healthcare programs as the "baby boom" generation retires.
Obama has warned that the burgeoning U.S. debt could unnerve U.S. financial markets, driving up borrowing costs and putting future economic growth at risk.
China, the biggest foreign holder of U.S. Treasuries, has urged the United States to get its fiscal house in order.
The bleak numbers could help build support for a bipartisan commission proposed by the White House that would recommend ways to address the budget problems.
Obama and his fellow Democrats face a growing voter backlash for the aggressive spending measures they have taken to stimulate the economy.
But Democrats point out that most of the fiscal mess has been inherited from the previous administration of Republican George W. Bush, who cut taxes and created an expensive prescription drug-benefit while pursuing wars in Iraq and Afghanistan.
The recession, which began in December 2007, also worsened the fiscal picture by depressing government revenues while forcing up spending on unemployment benefits and other safety-net programs.
The U.S. economy returned to growth last year after the worst downturn since the 1930s.

http://www.reuters.com/article/idUSTRE60U1PZ20100201

So...any ideas?
Do you think China will ever "take action" against us with our debt problems involving them?
Is there a REAL debt ceiling that Congress cannot raise?
What happens when the "breaking point" occurs?
Another great depression perhaps worse than before?

I keep on trying to get an understanding on this whole economy and however we will ever if ever be able to pay off this debt...but I just see a collapse of the economy as the only end point to all this...I see no other possibility that WILL be tried (at least as far as I see with this Administration)

 

[Omnis]

You thought the economy is bad? Wait until the dollar gets destroyed.

 

[Sam48]

Obama really needs to hit that reset button before it's to late for him. It worked for Clinton, but I guess Obama thinks to highly of himself to do it.

 

[Dotini]

WASHINGTON (Reuters) - The White House will predict a $1.6 trillion U.S. budget deficit in the 2010 fiscal year, a fresh record and the biggest since World War Two as a share of the economy, a congressional source told Reuters on Sunday.



http://www.reuters.com/article/idUSTRE60U1PZ20100201

So...any ideas?
Do you think China will ever "take action" against us with our debt problems involving them?
Is there a REAL debt ceiling that Congress cannot raise?
What happens when the "breaking point" occurs?
Another great depression perhaps worse than before?

I keep on trying to get an understanding on this whole economy and however we will ever if ever be able to pay off this debt...but I just see a collapse of the economy as the only end point to all this...I see no other possibility that WILL be tried (at least as far as I see with this Administration)

You thought the economy is bad? Wait until the dollar gets destroyed.

This is a badly needed new thread, so thanks to Delirious and Omnis.

I suppose in theory Congress could raise the debt ceiling out to the orbit of Pluto. The problem is how do you raise the money? If you continue to borrow it, you will eventually have to offer competitive interest rates, which in turn will cause the interest portion of the budget to balloon to a size which dwarfs everything else, and the government collapses in default.

If you print the money, then as Omnis hints, the economy will be destroyed through runaway inflation.

If you try to grow your way out of the debt, then that means more government stimulus and risky lending on the part of the banks, which is one main reason why we're here in the first place.

The final possible solution is a drastic cutback in spending. But where to cut so that it makes a sufficient difference? To cut back drastically on social security, medicare and pensions will get you thrown out of office and cause lot of suffering to the elderly (that's me!). My modest proposal is to drastically cut back on military expenses - to end America's global empire and its terrible costs. But that might get you thrown out of office too, as the chest-thumpers will put you in their sights.

One thing for sure, it will involve suffering - which is something that materialistic American consumers are not used to.

Respectfully submitted,
Dotini

 

[DK]

I agree with Dotini's modest proposal of cutting back military expenses. The trouble is that "patriotic" (and you know how much of suckers the Yanks are for the word "patriot") Americans will vote Obama out of office in 2012 and vote in Sarah Palin who in my opinion has the IQ of a brick. She's a creationist! Do you know what mess she'll put America in? I suppose she'll force schools to teach creationism are whatever it's calling itself these days and she'll bring paranoia against Muslims to all-time highs.

 

[Northstar]

It's amazing some of the paranoia people have about politicians. She can't make schools teach creationism as that would be against the constitution(yes it still exists).

I do think we need to cut way back on spending. There are thousands of govt. funded programs that shouldn't be funded by the govt. you could also cut NASA(Currently it's a multi billion dollar delivery service)

 

[Joey D]

Cut foreign aid, there's a big savings right there. It'd probably help curtail terrorism too if we stopped backing Israel.

Whatever happened to tax dollars being reinvested back into the country? Or does that make to much sense?

 

[FoolKiller]

The problem is that Obama either refuses to hear what people are saying about his spending habits, or he actually has economists on his cabinet that think what he is doing is a good thing. In the State of the Union he commented that economists on both sides said his stimulus plan worked, only to have the same people that told him before it wouldn't work tell him again that it didn't. He sees a net loss in jobs and thinks it is somehow better than it would have been.

And while he is calling for a freeze on some stuff he is still leaving the majority of the budget untouched. It is just a political move that will achieve little or nothing. The simple fact is that he and the rest of the politicians, Republican and Democrat, have finally reached a point where they can spend willy nilly and feel they have the power to ignore anyone that disagrees. They did it under Bush and they are now doing it under Obama.

Anyone wishing to attack Obama's spending needs to realize that half or more of the 2009 deficit was due to Bush. Both parties share the blame for the current deficit. Now from here on out we can blame Obama, but if this upsets you just remember that a vote for a Republican is not a vote for change because Obama hasn't done anything but act like Bush.

I agree with Dotini's modest proposal of cutting back military expenses. The trouble is that "patriotic" (and you know how much of suckers the Yanks are for the word "patriot") Americans will vote Obama out of office in 2012 and vote in Sarah Palin who in my opinion has the IQ of a brick. She's a creationist! Do you know what mess she'll put America in? I suppose she'll force schools to teach creationism are whatever it's calling itself these days and she'll bring paranoia against Muslims to all-time highs.

I am not sure whether to be offended by the stereotype, shocked at the notion that anyone believes Palin could even win a primary, or amazed at your lack of understanding of the president's ability to dictate what is taught in schools.

It seems to me that you don't understand how us Yanks think or how our country works.

 

[Joey D]

It's modern America, stranger things have happened the the president attempting to dictate what is taught in schools. I think at this point I'd believe almost anything.

 

[FoolKiller]

It's modern America, stranger things have happened the the president attempting to dictate what is taught in schools. I think at this point I'd believe almost anything.

They have tried dictating various things before, and via funding they can get some stuff through, but the simple fact is that it requires two branches to agree to a policy of "teach X = Get X dollars" and even then it requires states to be willing to play along, since schools are a state agency.

 

[Joey D]

They have tried dictating various things before, and via funding they can get some stuff through, but the simple fact is that it requires two branches to agree to a policy of "teach X = Get X dollars" and even then it requires states to be willing to play along, since schools are a state agency.

I guess never underestimate idiots in a large group, and our government is one of the largest collection of idiots on the planet. What they are capable of concerns me.

 

[Danoff]

you could also cut NASA(Currently it's a multi billion dollar delivery service)

You clearly have no idea what NASA is doing.

Do you think China will ever "take action" against us with our debt problems involving them?
Is there a REAL debt ceiling that Congress cannot raise?
What happens when the "breaking point" occurs?

I imagine it looks something like this:

- US looks to borrow funds
- Investors (China) say "we need a higher interest rate to be willing to loan to you"
- US says, no problem, we need to borrow funds to cover the interest
- Investors (China) say "we need a higher interest rate to be willing to loan to you"
- US says, no problem, we need to borrow funds to cover that interest
- Investors (China) say "we don't have enough funds to loan you"
- US says, raise taxes
- Tax revenue goes down due to reduced earnings, unemployment grows.
- US says, um... we can't pay you back.

This is a decision point. Taxes + borrowing do not cover the interest. Now you either have to default on US debt, start selling stuff, or print money. Those are the options. Defaulting is bad - it means that investors get screwed, and they won't loan you money anymore (bad credit score so to speak). It also harms all of the businesses, retirees, and hard working americans who held US debt - which is a lot of people. The economy suffers greatly and the US can't borrow anything to make adjustments. I very much doubt that we'd completely default.

Selling stuff is an option. We do have some things to sell. China may forgive us a few hundred billion if we give them some sort of rocket technology, military secrets, etc. I very much doubt that we'd do a whole lot of selling.

Printing money is an option too. It weakens the dollar a great deal, and everyone loses. We experimented with inflation in the 70's and it hurt us... a lot. I very much doubt that we'd rely on the printing press to cover the whole spread.

I think the option we'll take is to do all three.
- Sell secrets to allies (dangerous, but less dangerous than selling secrets to enemys)
- Come up with a reason to refuse to pay certain countries. Human rights violations in China, for example, would make a poplar reason not to pay them the interest they're due. This would likely lead to war.
- Print the remainder.

So we get inflation, probably a war with China, and have to leak our secrets to the British, Japanese, and who knows who else might buy... France?

The war with China and the secrets sold we can probably survive. The inflation will take a decade or two to recover from. We've traded a short term depression for a long term one.

 

[Eric.]

Time to ready the nukes, then.

 

[DK]

I am not sure whether to be offended by the stereotype, shocked at the notion that anyone believes Palin could even win a primary, or amazed at your lack of understanding of the president's ability to dictate what is taught in schools.

It seems to me that you don't understand how us Yanks think or how our country works.

Well, that's good news to me. I think you're right on the notion that I don't know much about America.

 

[Sam48]

You clearly have no idea what NASA is doing.

According to the Obama Administration, they've recently given NASA more fundings to advance global warming research. What a waste of tax dollars.

 

[Danoff]

According to the Obama Administration, they've recently given NASA more fundings to advance global warming research. What a waste of tax dollars.

Even as a global warming skeptic I don't agree that the research is a waste of money. I think it's important to learn and understand that field. Is it a role government HAS to take? There actually might be an argument for that. Is it a role the government SHOULD be taking in light of current economic conditions? That's a tougher argument to make. Is it the first place I'd cut back? Hell no.

 

[FoolKiller]

I'm actually curious what some of you think of what the budget will do to NASA. I haven't seen anything more detailed than that they are basically halting all future manned mission plans. Without the new rocket are they going to fall back on the shuttle again? Or do we rely on other countries to get astronauts up?

And on top of that, what is the funding situation looking like for the already launched exploratory research missions, like Cassini and the the Mars rovers?

Well, that's good news to me. I think you're right on the notion that I don't know much about America.

She can't hold her own in a face-to-face debate.

If she were quick witted enough to hold her own in a debate and answer unexpected questions she likely would be a strong candidate because she does have a lot of charisma. But her charisma only gets her as far as it does a cheerleader. I am not so sure she is dumb, but she definitely isn't quick.

 

[Dotini]

FYI...
Here is a group of tax protesters calling for a 4-day national strike beginning April 15.

http://www.rense.com/general89/tax.htm

I wonder if the Tea Partyers will take them up on it?

On the NASA question, I think they are going to cut back manned space projects to zero, including the shuttle and ISS. NASA budgets will be restricted to robotic probes to the outer planets, and Earth monitoring technologies.

 

[Danoff]

And on top of that, what is the funding situation looking like for the already launched exploratory research missions, like Cassini and the the Mars rovers?

It didn't look to me like the robotic missions were going to take any kind of hit - and nobody ever touches funding for a spacecraft that's already in the air.

 

[FoolKiller]

It didn't look to me like the robotic missions were going to take any kind of hit - and nobody ever touches funding for a spacecraft that's already in the air.

That's good. Some of those are bringing back some of the best information.

 

[YSSMAN]

Anyone wishing to attack Obama's spending needs to realize that half or more of the 2009 deficit was due to Bush. Both parties share the blame for the current deficit. Now from here on out we can blame Obama, but if this upsets you just remember that a vote for a Republican is not a vote for change because Obama hasn't done anything but act like Bush.

In case some of you missed this paragraph earlier, I quoted it again here because it is truthy.



I'd agree with cutting the military spending. Its still the giant vortex for our dollars, at war or not.

 

[Keef]

Whatever happened to tax dollars being reinvested back into the country? Or does that make to much sense?

If you're just going to give it back then why take it in the first place? The first step is already a waste of time, money, and is completely unnecessary.

I think military spending is one of the last places to cut spending. We have to defend the tools we need in order to reform all the issues in our country. If we were to get ourselves into a catastrophic war (like with China) and we got dominated, there would be absolutely no hope for reform, and there might not be a United States at all. It might be a bit far fetched, but it could happen, and I'd rather keep the chance as small as possible.

I would propose gun safety and marksmanship classes in public schools. That way we can keep the kids smart to figure a way out of this mess while they defend the onslaught of thousands of Chinese landing craft and millions of soldiers.

Basically, anything that makes us better than anyone else is what we need to keep funded. And anything that doesn't keep us better than everyone else needs to get cut. Like Medicaid. And imagine how many Americans would be out and about searching for jobs if unemployment suddenly went out the door. Oh, ****!

 

[Dotini]

I would propose gun safety and marksmanship classes in public schools. That way we can keep the kids smart to figure a way out of this mess while they defend the onslaught of thousands of Chinese landing craft and millions of soldiers.
!

Not bad. But why not go a step or two further? Teach the making of IED's in the schools, and open gun stores to selling RPG's and IED-making ingredients. These are far more potent and modern weapons than your Dad's Marlin, and will be necessary to either defend our shores from those hordes of Chinese, or even from our own tyrannical government should it be necessary to abolish as it says in our Declaration of Independence.

In reductio...
Dotini

 

[Joey D]

If you're just going to give it back then why take it in the first place? The first step is already a waste of time, money, and is completely unnecessary.

The government is always going to take our money, it's a fact of life I suppose. Since there isn't a way to change that fact then maybe we can at least change where out money goes. I don't want my tax dollars helping people in Haiti, I want my tax dollars helping people in the US to make our country better.

 

[Dotini]

The government is always going to take our money, it's a fact of life I suppose. Since there isn't a way to change that fact then maybe we can at least change where out money goes. I don't want my tax dollars helping people in Haiti, I want my tax dollars helping people in the US to make our country better.

In a manner of speaking, Haiti is our country. It was founded by our slaves, and we have invaded and meddled with it incessantly for hundreds of years. The Monroe Doctrine forbids other nations from meddling with it like we do. It's our baby.

 

[FoolKiller]

I think military spending is one of the last places to cut spending. We have to defend the tools we need in order to reform all the issues in our country. If we were to get ourselves into a catastrophic war (like with China) and we got dominated, there would be absolutely no hope for reform, and there might not be a United States at all. It might be a bit far fetched, but it could happen, and I'd rather keep the chance as small as possible.

So you maintain the National Guard properly. Just removing our troops sitting in bases in Germany, Japan, and various other countries that pose no threat to us would reduce costs greatly without affecting our defense capabilities at all. Keeping troops just sitting in other countries is purely an attempt to be ready for a quick offense, but short of quick in and outs of embassies they are primarily useless, and that role could be done by special forces kept on naval vessels. What possible reason do we still have troops in Germany for? The Nazis are gone, the wall is torn down, and democracy won. What are we watching over? Similarly, what purpose did our bases in the Middle East serve? When we were attacked from a group centrally located in Afghanistan we didn't just send those guys in. There weren't enough. They waited months for more troops to come in. Same for Iraq. Saddam could literally watch us building up our forces.

When people discuss military spending they rarely mean the National Guard. They typically only mean the guys sitting in other countries doing nothing, or they refer to troops in combat situations they disagree with. Those same guys could instead be Guardsmen or border patrol, things that actually defend the country.

It would clearly be better than having a Nobel Peace Prize winner asking Congress for more money so he could send our Guardsmen to war in another country, where their ability to directly defend our borders is severely limited.

 

[Dotini]

Three cheers for Foolkiller.👍

 

[DK]

I would propose gun safety and marksmanship classes in public schools.

Trouble is, suicidal students with more gun training = possibly more school shoot-outs. Or do you propose means-tests for people who want to take these classes?

 

[Omnis]

Trouble is, suicidal students with more gun training = possibly more school shoot-outs. Or do you propose means-tests for people who want to take these classes?

What an absurd post. You don't need training to pull a trigger.

 

[Dotini]

What an absurd post. You don't need training to pull a trigger.

Maybe we should equip all students who are children of NRA members with Glocks. That way, any kid who acts out in a suicidal assault in school will be brought down in a righteous crossfire of hot lead.