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  • 2013 Federal Budget Deficit Plunges – How, Why?

    It was so tempting to devote today’s E-Letter to a discussion about all of the scandals plaguing the Obama adminstration in recent weeks. In fact, some of my staff were very disappointed that I chose not to go there. My feeling was that the airwaves are so saturated with coverage of the Obama scandals, you might not want to see even more piling on from me, as much as I would like to. (There are some very good stories on the latest scandals in SPECIAL ARTICLES below.)

    Today, we’ll focus on the latest news that this year’s federal budget deficit will likely be significantly lower than previously estimated by the Congressional Budget Office, and the reasons why that is. But let us not be fooled into thinking that falling deficits are a permanent thing. No, in fact, the deficits and the national debt will continue a troubling increase over the next decade and even longer.

    We’ll also discuss the subject of our nation’s “unfunded liabilities” which now stand at a staggering $123 trillion, which is rarely ever mentioned by the media. And there are several other interesting points I will touch on today, but I don’t want to give everything away in this introduction. So please read on.

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  • On Obama’s 2013 Budget & the Crisis in Greece

    Today we begin by looking at President Obama's new federal budget request for FY2013, which begins on October 1. To the surprise of no one, he's asking for a record $3.8 trillion to spend in 2013. Also to the surprise of no one, his new budget calls for a myriad of tax increases, especially on families making over $250,000 a year. The budget does include some spending cuts, but remember that in Washington, a slowdown in funding growth qualifies as a spending cut.

    The federal budget deficit for 2012 is now estimated to be $1.3 trillion, marking four consecutive trillion-dollar budget deficits under Obama. But wait, the deficit for 2013 is only supposed to be $901 billion. Obama's new budget offers projections for the next decade, and the budget deficit never falls below $500 billion over the next 10 years.

    Next, we turn to Greece and the latest passage of a new round of austerity measures, spending cuts and more government layoffs in order to qualify for a new EU/IMF bailout loan of €130 billion ($173 billion). The loan will ensure that Greece does not default next month when a big bond bill comes due. While €130 billion should tide Greece over for awhile, the struggling nation will need more bailout money before year-end. It remains to be seen how long the EU nations will continue to write checks.

    It also remains to be seen what will happen in Greece's national elections in April. Given the massive demonstrations and torching of buildings that happened over the weekend, today's Greek leaders are almost certain to be kicked out of office. If they are replaced and the new leaders reverse the austerity programs, then Greece will default and withdraw from the EU. If that happens, it will be very ugly!

  • The Mother of All Budget Deficits

    President Obama unveiled his fiscal year 2011 federal budget last week, and it is another whopper. If approved, he would spend a record $3.83 trillion and run a deficit of at least another $1.3 trillion. The actual deficit could be much higher because his assumptions about the economy are considerably too optimistic in my opinion and that of many economists. Obama's new budget projections now show that the budget deficit for FY2010, which ends on September 30, will be much higher than previously forecast - a whopping $1.6 trillion. This week, we will examine the implications of trillion dollar deficits as far as the eye can see.