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Today I tackle several topics, each of which could take up an entire E-Letter. But these topics are very important, and I want to address them today. The first is the minutes from the March 19-20 Fed Open Market Committee meeting that were released last Wednesday. Those minutes definitively confirm that the Fed is ready to chart an end to quantitative easing.

The second topic is President Obama’s proposed federal budget for fiscal 2014 that was also released last Wednesday. The Obama administration claims that the latest budget proposal will cut the federal deficit by almost $1.2 trillion over the next 10 years. It will not. Furthermore, his new budget proposal would raise taxes and fees by over $1.1 trillion over the next decade. And that’s just for starters.

But before we go there, I want to touch on new data which confirms that US economic growth in the current recovery has been the weakest EVER, since 1930 when such data was first recorded – even worse than after the Great Depression. The recent Great Recession officially ended in the 2Q of 2009 – true enough. But growth since then has been the slowest on record.

That’s a lot to cover in one letter, so let’s get started.

Today, the national debt has mushroomed to almost $16.5 trillion. It has exploded by over 60% just since President Obama took office, when it was at $10 trillion. At the end of 2012, our national debt exceeded 100% of GDP (104%) for the first time since WWII. By the end of Obama’s second term, our national debt will top $20 trillion at the rate it’s growing.

We all know that at some point, this massive Ponzi scheme will come to an end. The only reason it has gotten to this point is because the US dollar is the world’s “reserve currency” which enables our government to print as much money as it wants. This will end only when foreign buyers of our debt decide to turn off the spigots. The only question is when.

Last week, one of the most respected research groups in the world predicted that the US likely has only 3-5 years before the wheels fall off and the world is thrust into a major financial crisis, possibly even a depression.

We’ll talk about all of these things as we go along today. But before we go there, let’s take a brief look at the economy before tomorrow’s advance (first) estimate of 4Q GDP.

Most of the forecasters I subscribe to expect economic growth to average only 1-2% in the first half of 2013. Most believe that 4Q GDP fell sharply from the 3.1% rate in the 3Q of last year, largely due to fears about the fiscal cliff. They also expect growth to improve modestly in the second half of this year to 2% or slightly higher. That’s not too optimistic.

One reason is that the end of the payroll tax holiday on December 31 means that workers’ pay went down by 2% on January 1, thus adding more headwinds to the economy this year. A person earning $50,000 a year before taxes, for example, will pay an additional $1,000 or more to the government this year.

Add to that the fact that we are sure to have another nasty debt ceiling battle next month, which will once again be unsettling to consumers who drive the economy. We all remember the fiasco in the summer of 2011 when the Dow plunged over 2,000 points. For these reasons and others, at least the first half of 2013 could be very dicey.

Actually there are three debt battles – the so called “trifecta” – that lie ahead. In addition to the debt ceiling battle, there is also the sequester/automatic spending cuts on March 1 and the “continuing resolution” to fund the government in the absence of a formal budget passed by Congress. That happens in late March. We will look at all three of these upcoming battles below.

Today we’ll also touch on the pork-laden fiscal cliff bill that passed on New Year’s Day. And we will ponder the question of whether the US has a “spending problem” or a “taxing problem.” Let’s start with this last one first.

As I discussed in my blog last Thursday, I believe that President Obama is more than happy to see us go over the "fiscal cliff" at the end of this year. Many, including Fed Chairman Ben Bernanke and the CBO, believe that if we go over the fiscal cliff, the combination of tax increases and mandatory spending cuts will send the economy back into a recession next year. At the same time, the stock markets could get hit very hard.

The president has laid blame for the fiscal cliff (and everything else wrong in America) on President George W. Bush and the Republicans in the House. He has also said that the Bush tax cuts caused our deficits to soar out of control, even though he now says he wants to keep those same tax cuts for all but the “millionaires and billionaires” (defined as individuals making over $200,000 and families making over $250,000 a year).

The mainstream media have been so critical and dishonest about the effects of the Bush tax cuts that most Americans don’t know about the benefits of lower tax rates, even though they have been in place for a decade or more. I just read the most informative article on the Bush tax cuts that I have seen anywhere. The article is by Peter Ferrara at Forbes.com. I have reprinted it for you below.

But before we get to that, let’s take a look at the latest economic reports which have been a mixed bag once again.

We begin today with some obligatory comments about the election and how we got it wrong. Obviously, I am very discouraged with the outcome of the election. The main mistake Spencer and I made (and others including Gallup, Rasmussen, Pew, Rove, Morris, etc., etc.) in our pre-election analysis was to significantly underestimate the turnout rates among Democrats. The widely-held view that Democrats were unenthused and wouldn’t turn out to vote, as suggested by numerous pollsters, was simply wrong.

We also we mistakenly believed that the 2008 surge in black, Latino, and young voter turnout would recede in 2012 to “normal” levels, as did most of the major pollsters noted in the previous paragraph. That didn't happen. These high levels of minority and young voter participation are apparently here to stay. Unfortunately, Obama won both the popular vote and the Electoral College comfortably. Following those opening comments, we turn our attention to the so-called "fiscal cliff" that is upon us.

I'm sure you have heard about the fiscal cliff, but today I will present you with the details, including how much it will affect the economy and how much it will cost you (based on your income level). I will also explain why I think the odds are greater that we will fall off the fiscal cliff this time. Given his election victory, I don't see President Obama willing to compromise much if at all.

If we do fall off the cliff, a new recession is very likely to happen next year, and that will almost certainly be bearish for stocks. Thus, the stakes are very high in this soon to be knock-down, drag-out!

I’ve been taking a lot of flak from the Obama supporters in this audience over the past few weeks. Some are demanding that I stick to economic and investment issues and stop criticizing the president. Sorry liberals, but I have long maintained that who we elect to run the country has a big impact on the economy and therefore investment trends.

The good news for those of you who are backing Obama (and giving me grief) is that the election will be over next Tuesday night, barring something unusual, and I will have to accept the outcome even if President Obama is re-elected. Fortunately, the polls have moved in favor of Governor Romney in recent weeks, and I hope to be relieved on Election Night.

Today, I want to make sure that my clients and readers are clear about what happened in Benghazi, Libya on the night of September 11 when four brave Americans were murdered by al Qaeda militants. Ambassador Chris Stevens repeatedly requested additional support to protect our Embassy there, and his requests were denied – by someone.

Unfortunately, the mainstream media is not reporting much on this story, with the exception of Fox News and conservative commentators like Limbaugh, Hannity, O’Reilly and a few others. The American people, and especially my readers, deserve to know the truth before the election! We will dig into that today.

The United Nations recently formalized a broad set of global taxes and penalties that it wants to impose on developed nations in the Northern Hemisphere, and especially the US. The UN wants to raise some $400 billion annually to send to lesser developed nations in the Third World. And the kleptocrats at the UN want to implement these huge new taxes by the end of this year while President Obama is sure to be in office.

These new taxes include a 1% income tax on all billionaires worldwide, a tax on all financial transactions (stocks, bonds, etc.), a tax on currency transactions, a carbon tax on developed nations, a tax on commercial airline flights from the US to Europe, a tax on oil and gas extracted offshore, a global tobacco tax, etc. Oh, and one more: control of the Internet.

Since the UN does not have the legal authority to impose these taxes, it will attempt to structure these new taxes as "treaties" with member nations. US treaties are signed by the President and ratified by the Senate. The House of Representatives has no say when it comes to treaties. The question is, would President Obama sign such a treaty? And would the Senate ratify it? I would like to say no.

You need to read the information I have included (and documented) in today's E-Letter carefully and consider it seriously before the election on November 6. We cannot allow our country to be subjected to UN defacto control vis-a-vis these onerous taxes. Above all, we cannot allow the UN to control the Internet. There is a choice in the upcoming election, and we need to speak loudly!

The US national debt topped $16 trillion last week, and it was almost as if no one paid attention. At the rate we are going, the national debt will top $20 trillion just four years from now in 2016. Despite four years of trillion-dollar budget deficits, the US economy remains stagnant with sub-2% growth in GDP – the worst post-recession recovery since the Great Depression.

You would think that our leaders in both parties would figure out that trillion-dollar deficits are NOT the answer, and that they are the problem. This is not really a political issue, because both parties in Washington have been guilty of spending us into oblivion. The difference is, now we're talking about trillions, not billions.

Last week, I read a great article in Forbes on what to do about the economy. I wish I had written it myself. But since I didn’t, I have reprinted it for you today. The author really tackles what it will take to turn our economy around. Not surprisingly, the author's suggested solution does not in any way look like President Obama's economic policies.