Congressional Budget Office
Financial experts in New York, London, and Brussels have tut-tutted Greece’s economic travails as Athens considers its future with the European Union. Why did they borrow so much money? How can they ever pay it back? Do they think that much debt is sustainable? Instead of pointing fingers at the innumerates running Athens, they should consider our own situation.
The Export-Import Bank died last night when its charter expired. After 81 years, what is commonly known as Boeing’s Bank is headed toward Washington’s trash bin. When Congress returns it could revive Ex-Im, which primarily subsidizes big business exports. But a proper burial for what Barack Obama once called “corporate welfare” would save Americans money, reduce economic injustice, and promote economic growth. Ex-Im’s closure is a very rare victory for the good guys in Washington. Crony capitalism is running rampant in America, undermining confidence in a market economy.
According to the CBO if the US wants to return back to its long-term debt/GDP average of 38% of GDP, it needs to boost revenues by 14% or slash spending by 13%. Alternatively, if it wants to keep debt/GDP at its current level of 74% of GDP, the US will need to boost revenues by 6% of cut spending by 5.5%.
In what looks like the latest threat to the US taxpayer stemming from the government's trillion-dollar student loan portfolio, VC-backed tech startups are using attractive refi offers to siphon off the best loans, leaving taxpayers with a book full of IBR enrollees and severely delinquent borrowers who aren't even thinking about making payments.
If the Fed end its strategy of reinvesting TSY holdings, net supply of treasury paper will be close to a trillion dollar per year, for the next decade, as the gigantic pile of securities on the Fed balance sheet shrinks and interest rate expenses explodes.
Democrats are moving on a “$12 by ‘20” pitch, whereby they hope to have the minimum wage hiked to $12 within the next five years. The rationale is simple: restore the purchasing power Americans once had and you will restore robust economic growth. Ok, maybe it's not that simple, because as Republicans note, raising the pay floor by nearly 70% may well cost America jobs, thus making things worse for the very people the wage hike was meant to help.
The key feature of age is that it happens no matter what you think. What does this mean? It means the “old countries” – their assets and their institutions, at least the ones that depend on population, income and credit growth – are “fastened to a dying animal” and are not likely to survive in their present form. Today, these countries, including the US, are victims of demography. Older people get more money from the government. And they pay less in taxes. Old people also slow the rate of GDP, for obvious reasons: They are not adding to output; they are living on it.
In the previous installments of this series, we discussed the hidden and often unspoken crisis brewing within the employment market, as well as in personal debt. The primary consequence being a collapse in overall consumer demand, something which we are at this very moment witnessing in the macro-picture of the fiscal situation around the world. Lack of real production and lack of sustainable employment options result in a lack of savings, an over-dependency on debt and welfare, the destruction of grass-roots entrepreneurship, a conflated and disingenuous representation of gross domestic product, and ultimately an economic system devoid of structural integrity — a hollow shell of a system, vulnerable to even the slightest shocks.
And so, a little over a year after the last debt ceiling melodrama, in which the US kicked the can on its maximum borrowing capacity to this Sunday, March 15, in the meantime raking up total US public debt to $18.149 trillion the soap opera with the self-imposed borrowing ceiling on America's "credit card" is back, and the US is once again faced with sad reality of its debt ceiling (now at well over 100% of America's upward revised GDP of $17.7 trillion). Tthe reason: two days from today Congress’s temporary suspension of the debt ceiling, which was approved in February 2014, ends.
The "Catastrophic Shutdown Of America's Supply Chain" Begins: Stunning Photos Of West Coast Port CongestionSubmitted by Tyler Durden on 02/12/2015 23:20 -0500
In a stunningly honest reflection on itself (and its peer group of professional prognosticating panderers), The Federal Reserve's San Francisco research group finds that - just as we have pointed out again and again - that since 2007, FOMC participants have been persistently too optimistic about future U.S. economic growth. Real GDP growth forecasts have typically started high, but then are revised down over time as the incoming data continue to disappoint. Possible explanations for this pattern include missed warning signals about the buildup of imbalances before the crisis, overestimation of the efficacy of monetary policy following a balance-sheet recession, and the natural tendency of forecasters to extrapolate from recent data. The persistent bias in the track records of professional forecasters apply not only to forecasts of growth, but also of inflation and unemployment.
Quietly, and with essentially no coverage from the mainstream media, an obscure resolution (No. 41) was introduced in the US House of Representatives this week. The entire point of the resolution (The Federal Government should not bail out State and local government employee pension plans or other plans that provide post-employment benefits to State and local government retirees) is to say that the federal government is broke. It can’t pay its own bills, and therefore is shouldn’t be responsible to pay anyone else’s either. This Resolution is a pretty scary dose of honesty.
Marilyn Tavenner, head of the U.S. Centers for Medicare and Medicaid Services, plans to step down at the end of February, she told her staff in an e-mail. As Bloomberg reports, Tavenner didn’t say why she was leaving. In November, she acknowledged that her agency had made a mistake in its calculation of the number of people enrolled under Obamacare.
How will the US government fund a sudden additional shortfall of $281 per American per year?
"My name is Jasmine and I support President Obama's move to give affordable auto insurance for everyone."