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Fed deficit TOPS ONE TRILLION DOLLARS


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Budget deficit tops $1 trillion for first time

 

Jul 13, 8:20 PM (ET)

 

By MARTIN CRUTSINGER

 

 

WASHINGTON - The federal deficit has topped $1 trillion for the first time ever and could grow to nearly $2 trillion by this fall, intensifying fears about higher interest rates, inflation and the strength of the dollar.

 

The deficit has been widened by the huge sum the government has spent to ease the recession, combined with a sharp decline in tax revenues. The cost of wars in Iraq and Afghanistan also is a major factor.

 

The soaring deficit is making Chinese and other foreign buyers of U.S. debt nervous, which could make them reluctant lenders down the road. It could also force the Treasury Department to pay higher interest rates to make U.S. debt attractive longer-term.

 

"These are mind-boggling numbers," said Sung Won Sohn, an economist at the Smith School of Business at California State University. "Our foreign investors from China and elsewhere are starting to have concerns about not only the value of the dollar but how safe their investments will be in the long run."

 

The Treasury Department said Monday that the deficit in June totaled $94.3 billion, pushing the total since the budget year started in October to $1.09 trillion. The administration forecasts that the deficit for the entire year will hit $1.84 trillion in October.

 

Government spending is on the rise to address the worst financial crisis since the Great Depression and an unemployment rate that has climbed to 9.5 percent.

 

Congress already approved a $700 billion financial bailout for banks, automakers and other sectors, and a $787 billion economic stimulus package to try to jump-start a recovery. Outlays through the first nine months of this budget year total $2.67 trillion, up 20.5 percent from the same period a year ago.

 

There is growing talk among some Obama administration officials that a second round of stimulus may eventually be necessary.

 

That has many Republicans and deficit hawks worried that the U.S. could be setting itself up for more financial pain down the road if interest rates and inflation surge. They also are raising alarms about additional spending the administration is proposing, including its plan to reform health care.

 

President Barack Obama and Treasury Secretary Timothy Geithner have said the U.S. is committed to bringing down the deficits once the economy and financial sector recover. The Obama administration has set a goal of cutting the deficit in half by the end of his first term in office.

 

In the meantime, the U.S. debt now stands at $11.5 trillion. Interest payments on the debt cost $452 billion last year - the largest federal spending category after Medicare-Medicaid, Social Security and defense.

 

The overall debt is now slightly more than 80 percent of the annual output of the entire U.S. economy, as measured by the gross domestic product. During World War II, it briefly rose to 120 percent of GDP.

 

The debt is largely financed by the sale of Treasury bonds and bills.

 

Many private economists say the administration had no choice but to take aggressive action during the financial crisis.

 

"We have a deep recession hammering tax revenues and forcing the government to provide a lot of help to the economy," said Mark Zandi, chief economist at Moody's Economy.com. "But without this help, the downturn would be even more severe."

 

History shows the dangers of assuming too soon that economic downturns have ended.

 

President Franklin D. Roosevelt made that mistake in 1936. Believing the Depression largely over, he sought to reduce public spending and to balance the federal budget, but that undermined a fragile recovery, pushing the economy back under water in 1937.

 

Japanese leaders made a similar mistake in the 1990s when they temporarily withdrew government stimulus spending, prolonging Japan's recession into one that lasted a full decade.

 

Republicans in Congress are seizing on the deficit - and the persistence of the recession - to attack Democrats.

 

"Washington Democrats keep borrowing and spending money we don't have," said House Republican Leader John Boehner of Ohio.

 

So far, interest rates have remained low.

 

This is partly because the Federal Reserve has kept a key short-term rate at a record near zero. Also, all the economic troubles in housing and the rest of the economy have depressed demand for credit by the private sector, meaning the government's borrowing costs are relatively low.

 

The benchmark 10-year Treasury security has risen by about a percentage point in recent weeks, but analysts note it is still trading at historically low levels of around 3.35 percent.

 

Geithner travels later this week to Saudi Arabia and the United Arab Emirates, where he is expected to face questions about the U.S. deficit. As he did during a visit to China last month, Geithner will try to reassure investors in the Middle East that their U.S. holdings are safe from a calamitous bout of inflation.

 

The deficit of $1.09 trillion so far this year compares to an imbalance of $285.85 billion through the same period a year ago. The deficit for the 2008 budget year, which ended Sept. 30, was $454.8 billion, the current record in dollar terms.

 

Revenues so far this year total $1.59 trillion, down 17.9 percent from a year ago, reflecting higher unemployment, which cuts into payroll taxes and corporate tax receipts.

 

Under the administration's budget estimates, the $1.84 trillion deficit for this year will be followed by a $1.26 trillion deficit in 2010, and will never dip below $500 billion over the next decade. The administration estimates the deficits will total $7.1 trillion from 2010 to 2019.

 

 

 

 

 

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The highest in TWENTY SIX YEARS.

 

Now, question for mz the pussy and Legacy:

 

Was 26 years ago, well before W. became president?

 

Then what the FREAKIN do you think the problem is?

 

I have an answer. But do you two ?

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Now, question for mz the pussy and Legacy:

 

Was 26 years ago, well before W. became president?

 

Then what the FREAKIN do you think the problem is?

 

I have an answer. But do you two ?

 

Do you want to handle this, Leg, or should I? I hope you say you will because if not, I'm gonna actually have to read the shitty article cal posted...

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Do you want to handle this, Leg, or should I? I hope you say you will because if not, I'm gonna actually have to read the shitty article cal posted...

 

 

I'm not even sure which he is referring to: unemployment, or deficit?

 

But, 26 years ago, a pretty awesome dude was in the Whitehouse immediately following a mindless idiot. Cal might want to adjust his time table.

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Your off point. I didn't say who was pres back then. It doesn't matter.

 

That is how long BEFORE YOU LIBERAL SISSIES ARE BLAMING BUSH FOR OBAMA'S

 

ACUTE AND MISERABLE FAILURES.

 

But it's nice to see another lib's mods come forward. And I gave him the benefit of the doubt

 

all this time in an honorable display of good sportsmanship.

 

I know, you libs don't get "good sportsmanship", but that was for everybody else.

 

Obama is sucking royally. I and millions of other Americans gave him a chance, now he

 

is literally scaring a major portion of America that doesn't sit in projects, smoke crack,

 

and/or just identify with liberals no MATTER WHAT they do or say.

 

So, is any lib wanting to comment about 26 years, Obama hit a new record deficit, by doing the

 

marxist crap he has been doing?

 

Or, with a lib's mod approval, just change the subject again? and again? and again?

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I'm not even sure which he is referring to: unemployment, or deficit?

 

But, 26 years ago, a pretty awesome dude was in the Whitehouse immediately following a mindless idiot. Cal might want to adjust his time table.

 

 

Kind of cyclical it would appear. A good president has to run a budget deficit to undo the damage caused by a bad president.

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Your off point. I didn't say who was pres back then. It doesn't matter.

 

That is how long BEFORE YOU LIBERAL SISSIES ARE BLAMING BUSH FOR OBAMA'S

 

ACUTE AND MISERABLE FAILURES.

 

But it's nice to see another lib's mods come forward. And I gave him the benefit of the doubt

 

all this time in an honorable display of good sportsmanship.

 

I know, you libs don't get "good sportsmanship", but that was for everybody else.

 

Obama is sucking royally. I and millions of other Americans gave him a chance, now he

 

is literally scaring a major portion of America that doesn't sit in projects, smoke crack,

 

and/or just identify with liberals no MATTER WHAT they do or say.

 

So, is any lib wanting to comment about 26 years, Obama hit a new record deficit, by doing the

 

marxist crap he has been doing?

 

Or, with a lib's mod approval, just change the subject again? and again? and again?

 

Wow you are really quaking in your boots. It's funny to see you all worked up over this. The recession is a serious problem but you're a little misguided by blaming someone who's been in office 4 months when the recession started in December of '07

 

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Kind of cyclical it would appear. A good president has to run a budget deficit to undo the damage caused by a bad president.

 

Exactly. However, I'd prefer he not spend (and manage his finances) like MC Hammer when we are running that deficit. How about curb some of that spending, allow revenues generated from private investment have the deficit shrink to a manageable level (not the apparent horribleness that Bush single-handedly created himself :rolleyes: ), and then unleash "all of these brilliant ideas."

 

"We had to do something" doesn't cut it as a viable excuse. You guys pay your taxes first, then we'll worry about "having to do" anything.

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Wow you are really quaking in your boots. It's funny to see you all worked up over this. The recession is a serious problem but you're a little misguided by blaming someone who's been in office 4 months when the recession started in December of '07

 

It's not being misguided, it's pure pouting. I don't think I have seen so many 70 year old men act like children, EVER. Be a man like McCain, concede and get the f'ck over it.

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I think I'll just continue smoking crack in the projects with there rest of my Liberal sissies, cal.

 

We sat around for eight years while the worst President in history fcuked us in the ass on all fronts. Obama didn't take over a complete mess? Really? He ruined it? This scapegoating of anything not like you has gone way too far, and the fact there are folks who agree with what you're saying is beyond frightening. You've officially lost whatever portion of your mind senility hasn't up-until-now robbed you of.

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I think the claim that you were raped by Pres Bush is in error. You should take that claim Obama's attorney general.

 

He'd make it a priority, as usual.

 

Meanwhile, your homophobe sexual references are concerning.

 

Perhaps you could learn how to express yourself without them.

 

Or, perhaps you could just STOP going so extremely overboard saying

 

whatever it is you are trying to say. Else, some of us will just feel sorry for you.

 

Just trying to help, seriously.

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Well apparently YOU think so.

 

But say, what about all that "serious discussion" you

 

wanted a good while back?

 

I could be wrong, obviously, but I think "serious discussion"

 

to you and a few others, means "stopping dissenting opinions

 

from being voiced by one means or another".

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seriously Cal..... are you that simple you keep crowing a political attack PR slogan?

 

Recession=lower income tax revenue

3 tax cuts that are aimed at the top 10% income bracket(they control 90% of all the wealth)= lower tax revenue

2 occupations/military spending=higher spending

medicare entitlement expansion= MUCH higher PERMANENT legacy spending on an increasing demographic

 

ALL of those things happened under Republican control.... BEFORE OBAMA

 

Banking/Insurance/Financial collapse= recession that can lead to a massive DEPRESSION..... This Recession was WORLWIDE....

 

Sure he has to invest into infrastructure stability because WALL STREET is ALL ABOUT PERCEPTION/CONFIDENCE.... Our System stops if no one believes in it because it is all based on credit and future possible growth.....

 

HE HAD NO CHOICE IT WAS SYMBOLIC BECAUSE WALL STREET IS ALL ABOUT SYMBOLISM AND THAT IS HOW OUR ECONOMIC SYSTEM WORKS.

 

As for this Healthcare movement.... sure I am proud we are ranked 37th while we spend the most and people are uninsured... Yes I like the SKYROCKETING health care/drug costs......

 

IF you were a true capitalist you would see that lower healthcare/drug costs passed on to employers would enable them to invest more and hire more.... I pay for an awful lot of healthcare costs for others and it stinks.

 

Can you imagine IF GM got a 40% reduction in their legacy and monthly healthcare costs how that can affect unit costs?

 

stop your parroting of some dumb political slogan.

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seriously Cal..... are you that simple you keep crowing a political attack PR slogan?

 

Recession=lower income tax revenue

3 tax cuts that are aimed at the top 10% income bracket(they control 90% of all the wealth)= lower tax revenue

2 occupations/military spending=higher spending

medicare entitlement expansion= MUCH higher PERMANENT legacy spending on an increasing demographic

 

ALL of those things happened under Republican control.... BEFORE OBAMA

 

Banking/Insurance/Financial collapse= recession that can lead to a massive DEPRESSION..... This Recession was WORLWIDE....

 

Sure he has to invest into infrastructure stability because WALL STREET is ALL ABOUT PERCEPTION/CONFIDENCE.... Our System stops if no one believes in it because it is all based on credit and future possible growth.....

 

HE HAD NO CHOICE IT WAS SYMBOLIC BECAUSE WALL STREET IS ALL ABOUT SYMBOLISM AND THAT IS HOW OUR ECONOMIC SYSTEM WORKS.

 

As for this Healthcare movement.... sure I am proud we are ranked 37th while we spend the most and people are uninsured... Yes I like the SKYROCKETING health care/drug costs......

 

IF you were a true capitalist you would see that lower healthcare/drug costs passed on to employers would enable them to invest more and hire more.... I pay for an awful lot of healthcare costs for others and it stinks.

 

Can you imagine IF GM got a 40% reduction in their legacy and monthly healthcare costs how that can affect unit costs?

 

stop your parroting of some dumb political slogan.

 

Wow, and I find myself gravitating towards Sev's answer? LOL

 

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Well apparently YOU think so.

 

But say, what about all that "serious discussion" you

 

wanted a good while back?

 

I could be wrong, obviously, but I think "serious discussion"

 

to you and a few others, means "stopping dissenting opinions

 

from being voiced by one means or another".

 

I'm supposed to know you're ready for "serious conversation" directly after your crack-smoking project sissies comment? You need to make up your mind, sir, because this is just too damn confusing.

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anyone still wish that we'd have listened to dubya and put our SS money in the stock market?

 

Yes. It was 4 % btw but had I put ALL of it in the shittiest passbook savings account from the git there was I could retire despite this dip.

 

You should know from the fortune 500 companies you run and your economics degree, Sev, that the SS option would have been in approved funds.

Right?

 

WSS

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My companies are all small and medium sized. since you want to take a shot at me personally with your special brand of sarcasm I know its from frustration.

 

Usually people who cant debate intellectually on a topic resort to character assasinations or sarcasm because than they dont have to focus a real answer.... usually because they cant.

 

This started between you and I on Bush Sr and has spiraled into basic economic theory. Its easy to be some bystander that can heckle and make comments about business/economics versus actually playing in the field. You should probably focus on reading some basic macro economics or taking a course versus well your witty reparte.

 

Keep your day job of being an entertainer, I am sure it is rewarding and challenging. These other mundane topics are obviously something you chose in your life to take a different path. Its not my fault your limited insights led you to back a Retarded horse and now a degrading party.

 

Maybe you felt akin to Bush Jr and how he felt about all that "fuzzy" math......birds of a feather.... like lemmings some of you hard core right wingers are.

 

 

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Yes. It was 4 % btw but had I put ALL of it in the shittiest passbook savings account from the git there was I could retire despite this dip.

 

You should know from the fortune 500 companies you run and your economics degree, Sev, that the SS option would have been in approved funds.

Right?

 

WSS

**************************

Lemmings, shlemmings.

 

Sev, just answer the question, I was interesting in what you had to say.

 

But you changed the subject.

 

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the SS option would have been in approved funds.

Right?

 

WSS

 

I tried to find an answer buried in his response about stupid Bush, stupid Republicans, stupid fuzzy math, and your stupid day job, but I couldn't.

 

The answer is "yes" though.

 

 

Sadly, the current political machine wont allow the conversation to move past "Bush & Co. wanted to put your SS in the stock market & look what would have happened!" When in reality, you would have had the "option" to put in the SM, GB's MB's, or "shittiest savings account imaginable."

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YOu cant have your stimulus cake and eat it all without having to crap it out at some point.

 

Im still a believer in the stimulus plan, but it has its good and bad tied to it... I guess we will get to see how it unfolds.

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Leg it was late and i just got home so I was a bit short tempered and his post just hit me wrong.

 

Take Steve for example, he is smart enough to move his money into more secured vehicles, but a huge number would have been talked into pushing the money into 401k's and got slammed losing too much of that money in the market.... you know that. People in their 60's would have been done with no where near enough time for a cyclical return.

 

Sure Private options are great for some people because they want and can handle that sort of control but the vast majority of the population can not nor knows how to manage those funds.... which was one of the principles in the first place for the creation of Social security run by the government for the people.

 

none of us really knew exactly IF the legislation would have passed thru the senate and house what the management and restrictions etc would have finally been.

 

Either way with the deregulation on the market and the crash we just had it would have been catastrophic for a huge elderly population and some middle to late age group.

 

You can admit it, I was not really against privatization it just depended on what vehicles would have been allowed for the move. I felt that that needed heavy controls for people who just are not savvy or interested enough.

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Choco I hear Crickets in here......... W and his economic team must go down in history as possibly the worst ever.

actually, my point in the post was to further indicate that O and his "crack" financial guru's that can't even figure out the tax code, after having authored some of it, are not the competent group we were led to believe.

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