$181 billion Deficit in July -- WHAT, ME WORRY?

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machinehead's picture
machinehead
Status: Diamond Member (Offline)
Joined: Mar 18 2008
Posts: 1077
$181 billion Deficit in July -- WHAT, ME WORRY?

This clown show is so completely absurd, you just have to roll on the floor and laugh:

Bailouts for financial firms and billions in tax revenue lost because of the recession drove the [fiscal year to date] deficit to a record $1.3 trillion in July, according to the independent Congressional Budget Office (CBO).  The federal deficit grew by another $181 billion in July.

Spending through July of 2009 has increased by $530 billion, which is 21 percent over the same period in 2008. The bailout money for Freddie Mac and Fannie Mae accounted for almost half of the spending increase. Unemployment benefits have more than doubled, Medicaid spending has grown by a quarter and Medicare spending has increased by 11 percent.

Tax revenue for the first three quarters of 2009 has fallen by approximately $350 billion, or 17 percent compared to the same period last year, due mostly to the effects of the recession on payroll, income and corporate taxes. A third of the decline is due to tax breaks in the stimulus, including the middle-class tax cut that President Obama campaigned on during last year's election.

The independent budget scorekeeper has projected the deficit to reach $1.8 trillion by the end of the fiscal year, Sept. 30. The deficit in 2008 reached $455 billion, which was a record at the time.

http://thehill.com/leading-the-news/deficit-grew-by-181-billion-in-july-...

That the bailout of Fannie and Freddie is costing hundreds of billions provides us with an object lesson. Let's recall that these were Congressionally-chartered, politically-managed companies.  Warnings were visible for years before the crisis erupted. The companies were operating with absurdly low capital, on the order of 1 to 2 percent of assets. An accounting scandal broke out five years ago, which required an army of 1,200 accountants at Fannie Mae alone to fix.

But KongressKlowns stood by and sucked their thumbs, until the smoking toaster in the kitchen burned the whole house down.

Based on its brilliant record of responsible financial management, Kongress wants to expand its mandate to a new sector of the economy:

House Speaker Nancy Pelosi (D-Calif.) stressed during a town-hall meeting in Colorado this week that the healthcare bill won't add to the deficit or restrict benefits and instead will increase access to care.

Ah ha ha ha ... AH HA HA HA!

In the SIxties, Medicare and Medicaid were sold on exactly this premise -- that they would be 'paid for' with a new payroll tax. That tax has been hiked several times. Yet the net present value of projected Medicare/Medicaid deficits is in the tens of trillions. It is so large that no one has any earthly idea of how to fix it. The gaping hole represents several YEARS worth of GDP.

And as The Hill reports, Medicaid spending grew by a quarter -- 25 percent -- this year alone. Much of this growth is permanent. Whoops, there goes several trillion more added to our negative net worth!

So -- the folks who saddled our kids with a quarter million apiece in debt are going to give us a shiny new benefit that 'won't add to the deficit'?

If you believe that, I've got $22 million in a blocked account in Nigeria. Kindly forward your bank account details, and I'll share 25 percent of it with you. Thanking you in advance, kind madam or sir ...

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: $181 billion Deficit in July -- WHAT, ME WORRY?

machinehead wrote:

So -- the folks who saddled our kids with a quarter million apiece in debt are going to give us a shiny new benefit that 'won't add to the deficit'?

If you believe that, I've got $22 million in a blocked account in Nigeria. Kindly forward your bank account details, and I'll share 25 percent of it with you. Thanking you in advance, kind madam or sir ...

 Funny! Even though it is so pathetically true. Speaking of shiny new benifits they will be flying 500 million dollars worth of G-5's as they spend 3,000 hours overseas while Rome the United States burns.

But hey, racking up a deficit that used to take a year in just one month, well they need a recess with their families.

Sounds fiscally responsibe, ethical, fair and wise to me!

investorzzo's picture
investorzzo
Status: Diamond Member (Offline)
Joined: Nov 7 2008
Posts: 1182
Re: $181 billion Deficit in July -- WHAT, ME WORRY?

Some one should send this to Nancy Pelosi............I wonder who would be buying her book?

http://www.usdebtclock.org/

machinehead's picture
machinehead
Status: Diamond Member (Offline)
Joined: Mar 18 2008
Posts: 1077
Re: $181 billion Deficit in July -- WHAT, ME WORRY?

Oh -- one standard stipulation that I forgot to add in the original post. The projected $1.8 trillion shortfall is a CASH BASIS deficit. This is meaningless for an entity like Usgov, which should be (but isn't) reserving currently for future obligations.

Here's an example. What if Usgov agreed to conform to ERISA pension rules (it doesn't now)? During an agreed-upon period -- let's say 20 years -- it would need to annually set aside cash reserves to cover the nearly $50 trillion negative net worth of its social benefit programs. That's $2.5 trillion a year, folks. Equal to the entire federal budget of a couple of years ago. Equal to a sixth of GDP.

Frankly, the U.S. economy does not generate a sufficient surplus to sustain setting aside such massive amounts of funds -- money that 'we owe to ourselves,' as Frank Roosevelt maniacally quipped when he introduced this galloping doomsday machine.

The FInancial Report of the United States, issued each December, is the only document in which appropriate GAAP accounting is employed. If I were the outside auditor of this report, I would be obliged to state in my opinion that the United States government does not appear likely to continue as a going concern.  If you read between the lines of the statements penned by the Treasury Secretary and Comptroller in the report, they are essentially saying the same thing. The national Ponzi scheme is busted flat, and it can't be fixed.

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