The Nation's Budget Outlook Is Worse Than You Think

Investor's Business Daily ^ | 08/26/2015 | Staff

[IBD editorial writer]

Budgets: The bad news is that the country is headed toward $1 trillion deficits in 10 years, according to the Congressional Budget Office. The worse news is that, if history is any guide, this forecast is probably way too optimistic.

[Terry L Smith]

The day when it was first annou9nced that WE were borrowing money from another country, was the day the national budget had already gone south.

[expat_panama]

tx fer posting, I was just about do it to myself!

[Sgt_Schultze]

The only reason W had a $1+ trillion deficit in his last year was because Obama rolled his $700 billion into w's last budget and it passed in the democrat majority Congress. Jugears got his stimulus spending, but the allocation occurred under W. That plan was intentional so Jugears would have an artificially high "deficit" to use as his baseline.

Since there hasn't been a budget passed in forever, I'd be in total favor of a $1 trillion tax reduction passed by a new Republican president and Congress - but on the back of Jugears' last budget to get things jump-started. But it would also put the final imprint on his failed tenure and give him the credit he deserves for being the champion of debt.

[Buckeye McFrog]

Good luck getting the public excited about this.

In the mind of the average Joe money hardly means anything anymore. It’s just paper that the Fed can crank out with a printing press, so we just need to run them a little faster. After all we’ve been doing it since 2009 with no apparent harm. Ten trillion is a number most people just can’t wrap their minds around anyway.

[Chgogal]

How will this end?

[IMR 4350]

Fact is your average Obama voter doesn’t know the difference between a billion and a trillion.

I’ve heard more than one say “just get a trillion from Bill Gates”.

No clue whatsoever.

[citizen]

I don't understand the considerable fluctuation in federal revenue rec'd VS payments due.
The yearly deficit is approx. $400B this year and is forecast to be over $1T in a few years.
I understand tax receipts will rise/fall based on economic performance but these deficit forecasts seem to consider factors other than unknown future economic activities.

[Senator_Blutarski]

"The only reason W had a $1+ trillion deficit in his last year was because Obama rolled his $700 billion into w's last budget and it passed in the democrat majority Congress. Jugears got his stimulus spending, but the allocation occurred under W. That plan was intentional so Jugears would have an artificially high "deficit" to use as his baseline. "

Sarge, by any chance do you have an article or document that explains the information above in detail? I'd like to be able to document that information for future use.

Thanks!

[Zakeet]

The Nation's Budget Outlook Is Worse Than You Think

In 2001, [the CBO] projected that the government would run a surplus of $889 billion by 2011. The actual result? A deficit of almost $1.4 trillion in 2011.

---

You have completely missed the main story!

It would be wonderful if the U.S. were only running a $1.4 trillion deficit. In fact, it is much, much worse.

For example:

1. The GAO itself estimates that the annual deficit is in the neighborhood of $7 trillion on a GAAP basis. The difference: ponzi entitlements such as SSI, Medicare, Medicaid, veterans benefits, and civil servant retirement, among many other things.
   
2. The taxpayers are incurring another huge liability each year from the GSE's (Government Sponsored Entities -- Fannie, Freddie, Sallie, Ginnie, Vinnie, etc.). A sobering percentage of the $5 trillion in student loans are already in some form of arrears. Care to guess what will happen to mortgage guarantees if (when) the propped up housing markets collapse?
   
3. The taxpayers were recently placed on the hook for a bailout for the banksters in case they can't pay their derivative bets -- a book that is estimated by some to be in excess of $1.4 quadrillion (that's 1,400 thousand trillion). Care to guess what will happen if interest rates increase, or the USD weakens, or somebody important (a sovereign, perhaps) defaults, or commodity prices continue to plunge (as they will when Iranian oil hits the market)?
   
4. The Plunge Protection Team has spent untold amounts propping up asset markets in the U.S. and unknown, but probably staggering amounts, rigging markets worldwide. What happens when they inevitably collapse?
   
5. Governments (and before much longer, hedge funds and individual investors) are dumping treasuries. Remember the Belgian Bulge, the New Zealand Purge before than, and the Chinese Churn ongoing at the present time? Who is providing the dollars to soak up all of that paper?
   
6. The deficit numbers are calculated with interest rates near zero. What happens to the deficit when rates inevitably rise? That's only another $1.5 or so hit -- if they stay at their historic six percent or so rate. Think that will happen for long?
   
7. The Fed is insolvent. Their highly leveraged balance sheet (worse than pre-collapse Lehman) is loaded (>$4.5 trillion) with toxic loans (another gift to the banksters) and government debt. What happens when their day of reckoning occurs -- like when interest rates begin to rise or the trash debt reaches maturity? Think the government can afford to let people figure out what the Federal Reserve Notes that people are carrying in their wallets and purses are really worth?
   
8. Speaking of financial panic, the FDIC is guaranteeing our entire system and has reserves of only about $20 billion. Think the government won't print with abandon in an attempt to prevent the mother of all bank runs?

Bottom Line: The nation's budget outlook is far worse than you think ... and that's the real story.

[thirst4truth]

Then lets put a Trillion this way: How long will it take to pay back ONE Trillion at the rate of a dollar every second? Unless you do the math you will never, ever guess.

Over 33,000 years!

[RipSawyer]

“How will this end?”

In a Sunday barbecue of course, like this, https://www.youtube.com/watch?v=sXEegYPD1Yw

If this needs a sarcasm tag there is no hope for any of us!

[Sgt_Schultze]

I don't know that there's a single source.
It's important to remember that the US budgetary fiscal year runs from from October 1 through September 30.

So, While Congress under GWBush was to have completed the FY budget by October 1 2008, The bills were still incomplete on Jan 20, 2009 when obama was sworn in. The new democrat Congress lost no time in passing an omnibus bill of the total open appropriations. Here's a link to the Senate discussion where they brag about how much extra they're planning to spend.
obama signed this on March 11, 2009 (GWB's last budget) - [obama's first official budget year will begin on October 1, 2009]

The stimulus bill [The American Recovery and Reinvestment Act of 2009] was signed into law on February 17, 2009 - again, this spending authorization officially occurred under GWBush's last budget year.

[Senator_Blutarski]

Thanks Sarge...

[Nailbiter]

bflr

[FreedomPoster]

Not well.

[gattaca]

bmp