Debt Consolidation

The Facts About Debt

CBO Projects The Federal Budget Deficit Will Add $1.2 Trillion to National Debt in 2009

Filed under: National Debt
Written by: UWSA Staff
January 8, 2009

The Congressional Budget Office projects that the U.S. federal budget deficit will hit an unbelievable $1.2 trillion, or 8.3 percent of the GDP for the 2009 budget year. The report entitled Budget and Economic Outlook: Fiscal Years 2009-2019 also warns that these figures do not include any future legislation such as the enactment of President-elect Barack Obama’s proposed economic stimulus package.

This report comes out on the heels of President-elect Obama warning that the country faces “trillion dollar deficits for years to come”.

The CBO report states that the budget outlook for 2009 “will be dramatically worse than it was in 2008″. In the first three months of of the 2009 fiscal year, which began on October 1, the government spent $408 billion more than it took in. The blame goes to a drop in corporate and individual tax revenues, and increased federal spending. The spending increase is largely attributed to the TARP program and the recent federal takeover of Fannie Mae and Freddie Mac.

The CBO’s baseline projections serve as a “neutral benchmark” that legislators and policy makers can use to determine the potential effects of any change in policy. The projected deficit for 2010 is about $700 billion or 4.9% of the GDP. President-elect Obama mentioned the new CBO projection at his news conference on Wednesday. “We know that our recovery and reinvestment plan will necessarily add more,” he conceded.

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Economic Deliverance?

Filed under: National Debt
Written by: UWSA Staff
December 11, 2008

We appear to be awash in bad news. The nation has been in a recession since December 2007. The number of people claiming unemployment benefits is the highest it has been in 26 years, and consumer spending, which is the fuel for the economy’s engine is drying up. Due to years of deficit spending, the national debt is closing in on $11 trillion.

So what do the leading economists in the nation think we should do? Increase the national debt to stimulate the economy. The thought behind it is that avoiding a deepening recession is more important than higher budget deficits. We have already committed $700 billion to bailout a financial industry that could not regulate itself. President-elect Obama has pledged to plow money into the largest infrastructure building plan since the Eisenhower Interstate highway program, and now we are going to pledge $14 billion to rescue the automobile industry, that is so oafish, it needs help to keep itself from stumbling into the abyss of bankruptcy.

We need a JFK challenge for the best and brightest Americans to come up with new solutions to our pressing issues. If we are going to invest tax dollars into bailing out companies that are too big to fail, shouldn’t we also have a say in how they use that money? If it comes down to borrowing money to stimulate the economy, shouldn’t we also invest in projects such as alternative energy to put people back to work and ease our dependency on foreign oil? In exchange for tax dollars, shouldn’t we demand that the foundering auto makers come up with a plan to focus on hybrid and 100% electric vehicles? Maybe then America can once again lead the world in something other than our carbon footprint.

The stakes are extremely high, but we have much to gain. Throughout our history, America has always risen to the occasion when things looked bleak. Tapping into the ingenuity of the American people has always been America’s salvation. Our deliverance from economic ruin depends on it.

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Obama: Increasing the Deficit Key to Economic Recovery

Filed under: National Debt
Written by: UWSA Staff
November 17, 2008

Barack Obama says that a bipartisan consensus of economists feel that investing billions into the troubled economy is more important than balancing the budget. Obama, appearing on 60 minutes Sunday night, said “the consensus is this: that we have to do whatever it takes to get this economy moving again, that we’re gonna have to spend money now to stimulate the economy.” He also stated we should not worry about the budget deficit this year or next, “That short term, the most important thing is that we avoid a deepening recession.”

Some of the President-elects other thoughts on the economy:

When asked about the $300 billion spent so far on The Troubled Asset Relief Program (TARP): We should be looking at what didn’t happen such as more banks failing or a bigger drop in the stock market, not just what has happened. He also wants more focus on the impact of foreclosures, and to “set up a negotiation between banks and borrowers so that people can stay in their homes.”

Comparisons of today to 1932: “We’re not going through something comparable to that. But I would say that this is as bad as we’ve seen since then.”

The dire straits of General Motors: “We need to provide assistance to the auto industry. But I think that it can’t be a blank check.” He would like the assistance contingent on all of the major stakeholders, management, labor, suppliers and lenders “coming together with a plan what does a sustainable U.S. auto industry look like?”

Moving the nation towards energy independence. “It’s more important. It may be a little harder politically (because of the drop in oil prices), but it’s more important.”

Re-regulation of the financial market “to restore a sense of trust, transparency, openness in our financial system.. And the answer is not heavy-handed regulations that crush the entrepreneurial spirit and risk taking of American capitalism.”

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