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diesel
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Joined: 05 Oct 2006
Posts: 793
Location: Australia & New Zealand
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 Posted: Wed Jun 10, 2009 2:53 am Post subject: |
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http://edition.cnn.com/2009/POLITICS/06/09/obama.paygo/index.html?iref=mpstoryview
| Quote: | President Obama on Tuesday proposed making "pay-as-you-go" rules for federal spending into law.
The so-called PAYGO proposal requires Congress to balance any increased spending by equal savings elsewhere, Obama said in announcing the measure that now goes to Congress. |
Here we go again. The US overspent the budget since 2002 during a bubble thanks to immense tax cuts while driving itself into a series of expensive, disastrous wars, a sure fire way to destroy an economy. Now, when it needs public spending, we have to hear talk about balancing the budget.
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rffrydr
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Joined: 30 Oct 2005
Posts: 16939
Location: Sunny California
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| Posted: Sat Jun 06, 2009 7:35 pm Post subject: |
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From Jim Welsh:
| Quote: | | But this foundation also needs some major changes in public policy. If we are to succeed in lowering the ratio of debt to GDP, we must adopt economic policies that encourage economic growth, and reduce government spending. As it stands today, almost 85% of the annual federal budget is on auto pilot, mandated by law. This makes it virtually impossible to lower the rate of increase of spending, let alone enacting actual spending reductions. Medicare and Social Security costs equaled 7.6% of GDP in 2008, and will climb to 12.5% by 2030. Long-term unfunded liabilities for Social Security and Medicare top $53 trillion, about 3.7 times today’s GDP of $14 trillion. The Medicare trust fund will run out of money in 2017, Social Security’s fund will be depleted in 2037. Those dates are dependent on the economy growing nicely, which could prove problematic given the many cyclical problems we face..... |
| Quote: | | It is going to be difficult to fund the increases in government spending through higher taxes. In 2006, the top 10% of wage earners paid 86.3% of all federal income taxes, while 35% of wage earners paid nothing. Adding $1,600 to $2,200 to the average family’s budget to combat carbon emissions will depress economic growth. And, increasing the cost of a car by $1,300 won’t help Detroit emerge from bankruptcy. It is far easier to believe in the need for universal healthcare, adequately funded retirements, and fighting global warming, than it is to understand why so much depends on lowering the ratio of debt to GDP. In 2008, the federal government spent $253 billion on interest expense or 1.8% of GDP. According to an analysis by the Congressional Budget Office of next year’s budget, in 2018 interest expense will rise to $703 billion or 3.6% of GDP. This is important since the government will spend more money in 2018 on interest than it will on education, job training, housing assistance, veterans’ health, science, workplace safety, transportation, the environment, foreign aid, and homeland security. If the ratio of debt to GDP is not brought under control, interest expense will progressively consume more of the federal budget, like a flesh eating disease. |
http://www.ritholtz.com/blog/2009/06/jim-welsh-investment-letter-–-may-22-2009/
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