World Finances Coming to a Breaking Point

March 16, 2010

CNN

By Fareed Zakiria

As a nationwide strike highlights Greece’s painful effort to fix its finances, much of the rest of the world is confronting an equally sobering reality, says analyst Fareed Zakaria.

“You can’t spend money you don’t have forever and hope people will lend you money, which is what has been going on,” Zakaria said in an interview with CNN.

He says governments, particularly in developed countries, rushed to bail out financial institutions in the economic crisis, leading to a massive increase in public debts. Now the bill is beginning to come due.

Zakaria says Greece has had chronic budget problems, and its plight is far more severe than that of other nations. In Athens, workers struck for 24 hours and thousands marched. Transit systems, schools, banks, television news and newspapers were closed down. Greece’s government is cutting services and raising taxes to bring down its budget deficit.

Zakaria, author and host of CNN’s “Fareed Zakaria GPS,” spoke to CNN on Thursday. Here is an edited transcript:

CNN: Is Greece’s financial crisis a sign of things to come for many more countries?

Zakaria: I tend to think that some of the panic about the lessons of Greece is overdone. Greece has been a very badly managed economy for a very long time. I read somewhere that Greece has been in some kind of state of default for about half of its existence as a nation since 1832.

To put it simply, Greece has been a basket case for a while. This recession has just dramatically exacerbated that problem and forced a crisis in Europe. We should be careful about drawing very broad analogies between Greece and other countries that are in very different situations.

That said, clearly the financial crisis has been transformed into a governmental crisis in this sense — basically the financial crisis was caused by the massive indebtedness of the financial system in many Western countries. Those debts have in effect been taken on by the government. The government had to bail out the financial industry.

All of that debt has been moved from the private sector to the public sector, and so you see in the United States that debt as a percentage of GDP [Gross Domestic Product] has gone up 20 percentage points in two years. That’s probably the fastest rise ever since World War II. It’s gone from roughly 50 percent of GDP to 70 percent in two years.

CNN: So at what level does it become unsustainable?

Zakaria: No one knows the answer to that question. At one level, it’s sustainable as long as the rest of the world has confidence in you. And clearly what happened to Greece was that the world lost confidence in Greece.

Japan has a massive debt to GDP ratio — 200 percent — but generally speaking, it’s still the second-largest economy in the world, there’s very large domestic savings so there’s a tendency to believe they’re good for their debt.

CNN: What’s the risk if countries do lose faith in the U.S.?

Zakaria: If people lose faith in a country, it means that you have to raise your interest rates to sell your debt. The only way people will lend you money is at very high interest rates.

If you can only borrow money at very high interest rates, the only thing you can do to get money is to kill your economy. If you raise interest rates, it kills economic activity in your own country.

CNN: The government made a choice during the financial crisis to take on debt to stimulate the economy, but at a certain point, do governments have to turn away from stimulating the economy and turn their focus to fighting inflation?

Zakaria: They certainly have to turn their attention away from stimulating the economy and toward having stable finances. I’m not sure inflation is the great danger, but you can’t run huge deficits forever, you can’t have your debt-to-GDP ratio keep going up.

This crisis has exacerbated a problem that existed within the Western world, which is very large structural deficits, which exist because we’re basically been unwilling to cut spending or raise taxes. So the result is you have these big gaps between what we want from our government in terms of services and what we’re willing to pay … the United States has a particularly bad case of this. The deficit is now 10 percent of GDP.

The basic problem is that we want more government than we are willing to pay for. Either we have to accept the reality of higher taxes or we have to accept the reality of significant cuts in spending.

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Abuse of Power by The Government

March 3, 2010

The Wall Street Journal

A string of electoral defeats and the great unpopularity of ObamaCare can’t stop Democrats from their self-appointed rendezvous with liberal destiny—ramming a bill through Congress on a narrow partisan vote. What we are about to witness is an extraordinary abuse of traditional Senate rules to pass a bill merely because they think it’s good for the rest of us, and because they fear their chance to build a European welfare state may never come again.

The vehicle is “reconciliation,” a parliamentary process that fast-tracks budget measures and was created in 1974 as a deficit-reduction tool. Limited to 20 hours of debate, reconciliation bills need a mere 50 votes in the Senate, with the Vice President as tie-breaker, thus circumventing the filibuster. Both Democrats and Republicans have frequently used reconciliation on budget bills, so Democrats are now claiming that using it to pass ObamaCare is no big deal.

Yet this shortcut has never been used for anything approaching the enormity of a national health-care entitlement. Democrats are only resorting to it now because their plan is in so much political trouble—within their own party, and even more among the general public—and because they’ve failed to make their case through persuasion.

“They know that this will take courage,” Nancy Pelosi said in an interview over the weekend, speaking of the Members she’ll try to strong-arm. “It took courage to pass Social Security. It took courage to pass Medicare,” the Speaker continued. “But the American people need it, why are we here? We’re not here just to self-perpetuate our service in Congress.”

Leave aside the irony of invoking “the American people” on behalf of a bill that consistently has been 10 to 15 points underwater in every poll since the fall, and is getting more unpopular by the day, particularly among independents. As Maine Republican Olympia Snowe pointed out in a speech last December, Social Security passed when Democrats controlled both Congress and the White House, yet 64% of Senate Republicans and 79% of the House GOP voted for it. More than half of the Senate Republican caucus voted for Medicare in 1965. Historically, major social legislation has always been bipartisan, because it reflects a durable political consensus.

Reconciliation is the last mathematical gasp for ObamaCare because Democrats can’t sell their policy to Senator Snowe, any other Republican, or even dozens of Democrats. This raw exercise of political power is of a piece with the copious corruption and bribery—such as the Cornhusker kickbacks and special tax benefits for union members—that liberals had to use to get even this far.

Democrats often point to welfare reform in 1996 as a reconciliation precedent, yet that bill passed the Senate with 78 votes, including Joe Biden and half of the Democratic caucus. The children’s health insurance program in 1997 was steered through Congress with reconciliation, but it, too, was built on strong (if misguided) bipartisan support. The Balanced Budget Act of 1997 that created Schip passed 85-15, including 43 Republicans. Even President Bush’s 2001 tax cuts, another case in reconciliation point, were endorsed by 12 Senate Democrats.

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80 Million Baby Boomers Could Bankrupt Social Security

February 8th, 2010

CNBC.com

By Rob Reuteman

As the record federal budget deficit draws increasing scrutiny from Washington to Wall Street to Main Street, deficit hawks may take aim at entitlement programs including Social Security.

And, the nearly 80 million Baby Boomers phasing into retirement will set in motion a dynamic that—if not addressed by Congress—could result in the next generation getting fewer benefits.

However, despite fears that Boomers will trigger a collapse of Social Security, experts say the system can and will survive for decades and generations to come.

Congress made significant fixes to Social Security during the 1970s, the 1980s and the 1990s, and there appears to be a slowly gathering political will to make it solvent for the next 75 years.

By 2017, Social Security is expected to start paying out more than it collects in payroll taxes, according to the 2009 Annual Report from the Social Security and Medicare Board of Trustees. There is currently a large surplus, but it will be drained by the year 2037. At that point, Social Security will only be able to pay out 75 percent of its benefits.

A separate report, done by the nonpartisan Congressional Budget Office, concludes much the same thing, but gives the system another 10 years before it begins to fall apart.

The trustees’ annual report “does not depict a program in crisis,” said Kathy Ruffing, of the Center for Budget and Policy Priorities. “Policymakers should act sooner rather than later to put the program on a sound long-run footing, but today’s beneficiaries and workers approaching retirement need not fear that their Social Security benefits are at risk.”

“Alarmists who claim that Social Security won’t be around when today’s young workers retire misunderstand or misrepresent the trustees’ projections,” she added.

Beginning the Boom

Looking back, the outlook was rosy for most Americans in 1946, the year earmarked as the beginning of the so-called “baby boom.” With World War II finally over, a 15-year stretch of bad times that had begun with the great Depression was finally over. They responded by having more babies than ever before, more than 78 million of them by 1964.

For Social Security, the mini-population explosion was both beneficial and problematic. Social Security is funded mostly through payroll taxes, with present-day workers funding the payouts for retirees. Since there have been so many Boomers in the workforce for so many years, there were a lot more people putting money into the system than taking it out.

As Boomers begin to retire, the huge group of people putting money into the system will begin taking it out of the system, which then will be funded by a generation of workers—the so-called Gen X—whose numbers are some 15 million fewer. The surplus of money paid into the system by Boomers will allow it to run into the late 2030s, even though it will begin paying out more than it takes in by 2017.

“We won’t have a crisis,” says Michael Astrue, commissioner of the Social Security Administration. “2037 is a long way off and there is no reason to panic, but this is a serious issue we need to resolve. Younger people tend to overreact.”

Count Gen-Xer Tom Firey among those younger workers who think they’re getting the short end of the stick. The managing editor of the conservative Cato Institute magazine, Regulation, first wrote about the subject nearly 10 years ago in a column headlined, “Boomers Fleece Generation X with Social Security.”

“Ever since we Gen-X/Yers began working, we’ve paid 12.4 percent of our earnings to Social Security,” he wrote. “In contrast, the Boomers will get a bargain. When they entered the workforce in the late 1960s, they paid only 6.5 percent of their earnings to Social Security. Only from 1990 on, when the Boomers had earned paychecks for a quarter-century, did they start paying 12.4 percent to Social Security, the same percentage we Gen-X/Yers have paid our whole lives.”

That’s why Firey dubbed it The Boomers’ Bargain: “They’ve paid less of their earnings into Social Security than we Gen-X/Yers, yet they’ll receive more in benefits than we will and we’ll pick up the tab.”

As often comes with age, Firey has mellowed some in the past 10 years, even injecting dark humor into his outlook today. He says, “The last two generations gave themselves some additional retirement benefits just before they left the workforce. The World War II generation gave itself annual COLA (cost-of-living allowance) raises in 1975, and the boomers gave themselves the prescription drug benefit earlier this decade.”

“In essence, these generations said, ‘I’m not willing to pay for these new benefits for myself, but I’m happy to force my kids and grandkids to pay for these benefits for me,’ “Firey added.

“That’s a lousy trick. Though to be fair, older generations don’t realize that this is what they’re doing,” Firey said. “What depresses me most is that my generation will probably turn around and do this to our children and grandchildren.”

Changes Over the Years

Social Security will mark its 75th anniversary this August. Signed into law by President Franklin Roosevelt during the Great Depression, it is the country’s most successful anti-poverty program, offering retirement, disability and survivor benefits to 50 million people. Over the past 40 years, lawmakers have tinkered with the formula several times to address financial problems:

* In 1972, Congress expanded benefits with the annual COLA adjustments.
* In the 1983, President Reagan created the Greenspan Commission to study Social Security and make recommendations. Headed by soon-to-be Federal Reserve Chairman Alan Greenspan, the commission grappled with the growing demographic problem of Baby Boomers, the youngest of whom were then 19.

Projections already showed that the ratio of workers paying retirees’ benefits would plunge from 16 to 1 to 2 to 1 when the last boomers retire decades in the decades to come.

To eliminate that deficit, the commission suggested hiking the Social Security payroll tax, and lifting the retirement age to 67 by 2026. Congress promptly passed the legislation and Reagan signed it.

Workers can still collect Social Security retirement funds when they turn 62, but that is the “early retirement age,” and benefits are reduced by about 25 percent.

The full retirement age now depends on when you were born. If you were born between 1943 and 1954, you receive full benefits if you retire at age 66. If you were born in 1960 or later, your full retirement age is 67. Some observers suggest the retirement age may need to be raised to age 70 if the system is to remain solvent.

* In the 1990s, Congress raised taxes on benefits to the current 12.4 percent.

In his February 2005 State of the Union Address, President George W. Bush named strengthening Social Security as one of the priorities for his second term in office. He also called for a transition to a combination of a government-funded program and personal accounts (“individual accounts” or “private accounts”) through partial privatization of the system.

This proved controversial and further Social Security reform has been blocked by the dispute over privatization. The recent turmoil in the financial markets exposed some of the problems that approach would pose, and privatization no longer appears to be on the table.

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Obama Grows The Drug War

February3,2010
The Raw Story
By Stephen C. Webster

It was not long ago when President Barack Obama’s new drug czar, former Seattle police chief Gil Kerlikowske, swept into Washington, D.C. and declared the “drug war” a public policy relic.

The Obama administration, he said, would move toward handling drug addiction as a medical problem, moving away from the brash enforcement tactics that hallmarked prior administrations.

“We’re not at war with people in this country,” Kerlikowske told The Wall Street Journal in May.

However, if the Office of National Drug Control Policy’s (ONDCP) budget for fiscal year 2011 is to be believed, Kerlikowske was full of hot air.

According to 2011 funding “highlights” released by the ONDCP (PDF link), the Obama administration is growing the drug war and tilting its funds heavily toward law enforcement over treatment.

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The president’s National Drug Control Budget also continues the Bush administration’s public relations tactic of obscuring the costs of prosecuting and imprisoning drug offenders. “Enron style accounting,” is how drug policy reform advocate Kevin Zeese described it, writing for Alternet in 2002.

The budget places America’s drug war spending at $15.5 billion for fiscal year 2011; an increase of 3.5 percent over FY 2010. That figure reflects a 5.2 percent increase in overall enforcement funding, growing from $9.7 billion in FY 2010 to $9.9 billion in FY 2011. Addiction treatment and preventative measures, however, are budgeted at $5.6 billion for FY 2011, an increase from $5.2 billion in FY 2010.

In short, the Obama administration’s appropriations for treating drug addiction are just short of half that dedicated to prosecuting the war.

A ONDCP press release describes these figures as “balanced.”

“The new budget proposal demonstrates the Obama Administration’s commitment to a balanced and comprehensive drug strategy,” Kerlikowske added, in the advisory. “In a time of tight budgets and fiscal restraint, these new investments are targeted at reducing Americans’ drug use and the substantial costs associated with the health and social consequences of drug abuse.”

“It sure was an encouraging signal when Drug Czar Kerlikowske declared that the ‘war on drugs’ was over shortly after he took the job last year,” commented Tom Angel, spokesman for Law Enforcement Against Prohibition. “But until the budget numbers match up with rhetoric, it looks like the war is still being waged.”

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545 People Responsible For All Of U.S. Woes

February 2, 2010

Orlando Sentinel Star

By Charley Reese

Politicians are the only people in the world who create problems and then campaign against them.

Have you ever wondered why, if both the Democrats and the Republicans are against deficits, we have deficits? Have you ever wondered why, if all the politicians are against inflation and high taxes, we have inflation and high taxes?

You and I don’t propose a federal budget. The president does. You and I don’t have the Constitutional authority to vote on appropriations. The House of Representatives does. You and I don’t write the tax code. Congress does. You and I don’t set fiscal policy. Congress does. You and I don’t control monetary policy. The Federal Reserve Bank does.

One hundred senators, 435 congressmen, one president and nine Supreme Court justices – 545 human beings out of the 235 million – are directly, legally, morally and individually responsible for the domestic problems that plague this country.

I excluded the members of the Federal Reserve Board because that problem was created by the Congress. In 1913, Congress delegated its Constitutional duty to provide a sound currency to a federally chartered but private central bank.

I excluded all but the special interests and lobbyists for a sound reason. They have no legal authority. They have no ability to coerce a senator, a congressman or a president to do one cotton-picking thing. I don’t care if they offer a politician $1 million dollars in cash. The politician has the power to accept or reject it.

No matter what the lobbyist promises, it is the legislation’s responsibility to determine how he votes.

A CONFIDENCE CONSPIRACY

Don’t you see how the con game that is played on the people by the politicians? Those 545 human beings spend much of their energy convincing you that what they did is not their fault. They cooperate in this common con regardless of party.

What separates a politician from a normal human being is an excessive amount of gall. No normal human being would have the gall of Tip O’Neill, who stood up and criticized Ronald Reagan for creating deficits.

The president can only propose a budget. He cannot force the Congress to accept it. The Constitution, which is the supreme law of the land, gives sole responsibility to the House of Representatives for originating appropriations and taxes.

O’neill is the speaker of the House. He is the leader of the majority party. He and his fellow Democrats, not the president, can approve any budget they want. If the president vetos it, they can pass it over his veto.

REPLACE SCOUNDRELS

It seems inconceivable to me that a nation of 235 million cannot replace 545 people who stand convicted — by present facts – of incompetence and irresponsibility.

I can’t think of a single domestic problem, from an unfair tax code to defense overruns, that is not traceable directly to those 545 people.

When you fully grasp the plain truth that 545 people exercise power of the federal government, then it must follow that what exists is what they want to exist.

If the tax code is unfair, it’s because they want it unfair. If the budget is in the red, it’s because they want it in the red. If the Marines are in Lebanon, it’s because they want them in Lebanon.

There are no insoluble government problems. Do not let these 545 people shift the blame to bureaucrats, whom they hire and whose jobs they can abolish; to lobbyists, whose gifts and advice they can reject; to regulators, to whom they give the power to regulate and from whom they can take it.

Above all, do not let them con you into the belief that there exist disembodied mystical forces like “the economy,” “inflation” or “politics” that prevent them from doing what they take an oath to do.

Those 545 people and they alone are responsible. They and they alone have the power. They and they alone should be held accountable by the people who are their bosses – provided they have the gumption to manage their own employees.

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WH Blames Outdated Computers for Ineffective Government

January 15, 2010

The Hill

By Ian Swanson

A big reason why the government is inefficient and ineffective is because Washington has outdated technology, with federal workers having better computers at home than in the office.

This startling admission came Thursday from Peter Orszag, who manages the federal bureaucracy for President Barack Obama.

The public is getting a bad return on its tax dollars because government workers are operating with outdated technologies, Orszag said in a statement that kicked off a summit between Obama and dozens of corporate CEOs.

“Twenty years ago, people who came to work in the federal government had better technology at work than at home,” said Orszag, director of the Office of Management and Budget. “Now that’s no longer the case.

“The American people deserve better service from their government, and better return for their tax dollars.”

The White House release that included Orszag’s comments said one “specific source” of ineffective and inefficient government is the huge technology gap between the public and private sectors that results in billions of dollars in waste, slow and inadequate customer service and a lack of transparency about how dollars are spent.

Obama is meeting with CEOs to solicit their views on how to improve the federal government with new information technology.

“Improving the technology our government uses isn’t about having the fanciest bells and whistles on our websites — it’s about how we use the American people’s hard-earned tax dollars to make government work better for them,” Obama said in a statement.

Obama had proposed the meeting in April. CEOs from Craigslist, Facebook, Microsoft, Adobe Technology and Monster.com are among those taking part.

“It’s time to bring government into the 21st century,” Orszag said. “Information technology has the power to transform how government works and revolutionize the ease, convenience and effectiveness by which it serves the American people.”

Those attending the summit are to break into smaller groups to discuss streamlining government operations, improving customer service and maximizing return on IT investments.

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Speed Sensors On Red-Light Cameras Could Help Raise Money

January 11, 2010

Los Angeles Times

By Shane Goldmacher

Speeding may be dangerous for drivers, but it could soon be a boon for California’s fiscal health.

Tucked deep into the budget that Gov. Arnold Schwarzenegger unveiled Friday is a plan to give cities and counties the green light to install speed sensors on red-light cameras to catch — and ticket — speeding cars.

Those whizzing by the radar-equipped detectors at up to 15 mph over the limit would have to pay $225 per violation. Those going faster would be fined $325.

Small-government advocates want to put the brakes on the plan.

“This is a budget item for the state?” said Lew Uhler, president of the National Tax Limitation Committee. “This is totally reprehensible.”

Red-light cameras are already in place in communities across the Southland. The governor wants to install speed detectors in 500 of those cameras, which would nab an estimated 2.4 million speeding violators a year, according to the state Department of Finance.

In Beverly Hills, for instance, there are nine red-light cameras, which could catch 835 speeders a month, the Schwarzenegger administration estimated.

That would add up to big bucks for cash-strapped California — about $337.9 million through June 2011 — to pay for state courts. Every year after that, the program would generate nearly half a billion dollars, the Finance Department says. Local governments would get a share.

All of which annoyed Uhler.

“I was nailed by one of these [red-light] turn cameras. It’s so irritating,” he said. As for the possibility of driving a smidgen over the speed limit and receiving an unwelcome ticket weeks later in the mail: “Just obnoxious,” he said.

The proposal also touted safety: “There would be . . . fewer accidents and injuries to drivers, passengers and pedestrians.”

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House Approves $290 Billion Increase in Debt Limit

December 18, 2009

My Way

By Andrew Taylor

The House on Wednesday passed legislation giving the federal government the ability to borrow a whopping $290 billion to finance its operations for just six additional weeks.

The 218-214 vote sends the must-pass bill to the Senate, which is expected to approve it as its last act before adjourning for the year. The alternative would be a market-rattling, first-ever default on U.S. obligations.

The measure is needed as a result of the out-of-control budget deficit, which registered $1.4 trillion for the budget year that ended in September. The current debt ceiling is $12.1 trillion and is set to be reached by Dec. 31.

Democrats had hoped to pass a far larger increase of almost $2 trillion to avoid another vote before next year’s midterm elections – and to wrap the increase into the popular defense appropriations bill to give some political cover.

But that plan fell apart amid opposition from about a dozen Senate Democratic moderates, who say they will refuse to vote for a debt limit increase unless it is accompanied by legislation to establish a new bipartisan task force to come up with a plan to curb the deficit. That idea is opposed by Democratic leaders such as House Speaker Nancy Pelosi, D-Calif.

Wednesday’s bill delays the showdown in February.

Another complicating factor is moderate “Blue Dog” Democrats, who are demanding a “pay-as-you-go” budget law aimed at ensuring that new tax cuts or new spending programs don’t increase deficits. Otherwise, they won’t vote for the next debt increase.

The Senate is generally opposed to the idea, even though it was the law of the land for more than a decade.

Debate over the measure broke, predictably, along partisan lines. Because Democrats control both Congress and the White House, it was their job to muster the votes required to advance the bill, even though much of the increase is required due to economic conditions inherited by President Barack Obama as he took office. The down economy has cut tax revenues sharply.

Republicans – who helped supply votes to increase the debt ceiling just last year – unanimously opposed the legislation, which is required to issue new debt to pay for federal operations and deposit up to $50 billion into the Social Security trust funds.

“We should not be asking for more credit, we should be developing a plan to pay down our deficit so that future generations are not trapped under this mountain of debt,” said Rep Dave Camp, R-Mich.

“The bottom line is, having the government shut down is not an option,” said Rep. Russ Carnahan, D-Mo.

House Democrats were furious with Sen. Russ Feingold, D-Wis., who, because of his opposition to the wars in Iraq and Afghanistan, refused a request from his leadership to support putting the short-term increase in the debt limit into the defense measure. His move required his fellow Democrats in both House and Senate to vote on the measure without accompanying political cover.

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U.S. Needs Plan to Tame Debt Soon

December 15, 2009

Reuters

By Andy Sullivan

The U.S. government must craft a plan next year to get its ballooning debt under control or face possible panic in financial markets, a bipartisan panel of budget experts said in a report on Monday.

Though the government should hold off on immediate tax hikes and spending cuts to avoid harming the fragile economic recovery, it will need to make such painful changes by 2012 in order to keep debt at a manageable 60 percent of GDP by 2018, according to the Peterson-Pew Commission on Budget Reform.

Without action, investors could lose confidence in the United States, driving down the dollar and forcing up interest rates, said the former lawmakers and budget officials who crafted the report. That could cause a sharp decrease in the country’s standard of living.

“We will be less free if we don’t tackle this,” said Jim Nussle, a Republican member of the commission who earlier served as a White House budget director and chairman of the budget committee in the U.S. House of Representatives.

The 34-member commission published its report as Congress was poised to raise the debt limit from its current $12.1 trillion level to allow the government to continue operating.

The national debt has more than doubled since 2001, thanks to the worst recession since the 1930s, several rounds of tax cuts and wars in Iraq and Afghanistan.

A looming wave of retirements over the coming decade is expected to make the situation worse.

The national debt currently accounts for 53 percent of GDP, up from 41 percent a year ago. That’s likely to rise to 85 percent of GDP by 2018 and 200 percent of GDP by 2038 unless dramatic changes are made, the commission said.

The commission did not issue specific prescriptions but said tax increases and spending cuts would probably be needed.

It said Congress and the Obama administration should set specific targets each year, with automatic spending reductions and tax increases kicking in if they are not reached.

The Democratic-controlled Congress is unlikely to fix the problem on its own given the highly partisan atmosphere, commission members said.

“You’ve got to have a few Republican votes, and there have been none. And there has been no possible way in the current political system yet to find that sensible center,” said former Democratic Representative Charlie Stenholm.

The commission backed the creation of an outside commission, similar to one used to close miliary bases, to create the necessary political cover.

Such a proposal is included in a crush of year-end legislation that could clear Congress this week but it is opposed by many key Democrats.

The United States must act to ensure that it does not join Dubai, Greece, and other countries that risk losing the confidence of investors, the commission said.

“It’s imperative that we take action before the financial markets force us to,” said Douglas Holtz-Eakin, a former Congressional Budget Office director who advised Republican John McCain’s presidential campaign last year.

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2010 Deficit Higher than 2009 in First 2 Months of Year

December 9, 2009

Reuters

By Andy Sullivan

In October and November, the government spent $292 billion more than it took in, the nonpartisan Congressional Budget Office said.

That was even worse than the same period last year, when the government was on its way to posting a record $1.4 trillion deficit for the fiscal year that ended Sept. 30.

The federal budget has been battered by the worst economic downturn since the Great Depression of the 1930s, as tax revenues have plunged and spending on safety-net programs like unemployment insurance have skyrocketed.

The budget deficit was $176.4 billion in October, according to Treasury Department records, and the CBO estimated the deficit for November will have come in at $115 billion.

The CBO gave its figures in billions of dollars and said numbers may not add up to the totals because of rounding.

Receipts totaled $132 billion in November, the CBO estimated, down 9 percent from the same month last year. That was partly due to new legislation that gives increased tax write-offs to corporations.

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