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Obama Budget

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What Do You Think Of President Obama's Budget Proposal?

By , Associate Editor, Money Morning -

U.S. President Barack Obama released his fiscal 2012 budget request Monday, igniting a partisan debate that's certain to escalate in the days and weeks to come.

The details will take months to hammer out, but the outcome is clear: American households can expect a lengthy dose of austerity.

The one question still to be answered is this: Just who will be hit the hardest?

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Obama Budget Proposal Kicks Off Battle Over Spending Cuts, Tax Increases

By , Associate Editor, Money Morning -

U.S. President Barack Obama yesterday (Monday) sent to Congress his $3.7 trillion budget request for fiscal year 2012, kicking off a congressional battle to determine a balance of spending cuts and tax increases that could reduce the country's $1.6 trillion deficit.

The Obama budget plan intends to shrink next year's deficit to $1.1 trillion. The Congressional Budget Office (CBO) last month projected 2011's deficit to hit $1.5 trillion, although a new estimate Monday from the Obama administration pushed the total to $1.6 trillion, or 10.9% of gross domestic product (GDP). Next year will be the fourth consecutive year with a budget deficit of more than $1 trillion.

President Obama said his federal budget proposal aimed to "ask Washington to live within its means, while at the same time investing in our future."

"What we've done here is make a down payment, but there's going to be more work that needs to be done, and it's going to require Democrats and Republicans coming together to make it happen," said President Obama.

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High-Speed Rail Initiative Stoked by Obama Budget

By , Managing Editor, Money Morning -

U.S. President Barack Obama is poised to submit his fiscal 2012 budget on Monday, and one of its outlays will be $8 billion for high-speed rail development.

Obama first outlined his vision for an expansive high-speed rail network in 2009. The initiative promised to create jobs, lower carbon emissions, increase efficiency, and improve commerce.

Since then, Republican opposition has worked hard to derail the project, which it deems an unaffordable waste of taxpayer funds. But just when it appeared his critics had taken control of the debate, the President redoubled his commitment to the project, calling for $53 billion to be spent on high-speed rail projects over the next six years.

Obama said in his State of the Union Address that he wants 80% of Americans to have access to high-speed rail by 2025.

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Why the Fed Won't Rescue America's Plunging Savings Rate

By , Global Investing Specialist, Money Morning -

In the 1992 election campaign, H. Ross Perot predicted a "giant sucking sound" of U.S. jobs heading for Mexico if the North American Free Trade Agreement passed. Perot seems to have been wrong on that - wherever U.S. jobs have gone, it's not Mexico. 

Nevertheless, if you listen carefully there's still a "giant sucking sound" - but this time it's the sound of U.S. capital headed overseas.

To find out what the Fed must do to keep capital at home, and why it won't act, read on...

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We Want To Hear From You: Time to Answer the Question of the Week

By , Money Morning -

With the inaugural installment of our new "Money Morning Question of the Week" feature under our belts, we are extremely excited about the insightful and passionate responses our readers continue to share on the topic of health care. We are dedicated to reporting and sharing cutting edge news and information with you, and we think feedback is a necessary part of making this process as successful as possible.

Please take some time to ponder this week's question, and share any thoughts, concerns or questions you have about U.S. debt. Some fear it, some are angered by it, and others are finding ways to profit from it. We want to know what you think about our country's situation and how it will affect you in all the positions you may hold - taxpayer, employee, business owner or investor.

Check back here later this week as we post the answers and pose a new question for discussion - don't be shy, we are ready and waiting to hear what you have to say!

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Will America Choke on its Own Debt?

By , Executive Editor, Money Morning • @privatebrief -

Is America getting in too deep?

According to a new estimate by the Congressional Budget Office (CBO), if the United States continues along its current path, U.S. public debt will reach 90% of the nation's economic output by 2020.

Given that federal debt has already zoomed to 53% of gross domestic product (GDP), this projected additional escalation seems outrageous.

Unfortunately, it's only a piece of the story.

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Can Democrats Dislodge the Debate Over Healthcare Reform?

By , Contributing Writer, Money Morning -

If U.S. President Barack Obama goes ahead with a plan to have Democrats invoke a parliamentary gambit known as "reconciliation" to pass healthcare reform, a little known provision in the budget cycle ensures that Washington politicians will get to the endgame in less than 60 days.

One of the peculiarities of reconciliation is that it is a creation of the 1974 Budget Act and is linked to the annual budget cycle in Congress. It has been used to pass more than 22 tax cuts and deficit reductions over the years.

But the Budget Act specifies that Congress must complete action on its budget resolution by April 15 of each year. Once the budget resolution conference report is adopted by both the House of Representatives and the Senate, its terms govern the remainder of the budget process for that year - meaning no further spending measures can be introduced, including healthcare reform.

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Obama Deficit Brings Us Closer to the Brink of National Bankruptcy

By , Global Investing Specialist, Money Morning -

U.S. President Barack Obama's budget for 2011, presented on Monday, shows a deficit of $1.3 trillion for the fiscal year that ends that September. That shortfall is actually $287 billion more than the Congressional Budget Office (CBO) had projected less than a week earlier, when it had released a budget forecast of its own for that same fiscal year.

Granted, we're getting used to seeing budget deficits expand at a pretty quick pace these days. But even by government standards an increase of nearly $290 billion in less than a week is almost too much to bear!

All kidding aside, $105 billion of this $287 billion increase came about mostly because of a change in "assumptions." The CBO budget assumed that all the 2001 Bush tax cuts would be reversed, whereas the Obama budget reverses only those that applied to the rich (those with incomes above $250,000).

The CBO budget also made the ridiculous assumption that the Alternative Minimum Tax (AMT) would be allowed to revert to its 2001 level, forcing 25 million taxpayers to calculate their taxes twice - and to then pay the higher of the two estimates. That was never going to happen, and the Obama budget finally abandons that idiotic piece of fiction.

The disparity in deficit projections between the CBO and the Obama administration weren't limited just to fiscal 2011. For the period from 2011 to 2020, the CBO forecasted a budget deficit of $6.047 trillion, while the Obama budget released just days later projected a shortfall of $8.532 trillion - a difference of $2.485 trillion.

The difference in assumptions between the CBO and Obama projections explains nearly half of that difference. Of course, that still leaves the other half.

And a troublesome half it is.

To find out how these numbers may forecast a U.S. bankruptcy, read on...

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Investment News Briefs

By , Money Morning -

Alcoa Narrows Loss, Misses Estimates; Financial Services Fee Part of Obama's Budget Plan; China's Exports Grow For 1st Time in 13 Months; Google Slammed With Complaints on Nexus One Phone; Femsa Sells Beer Franchise To Heineken; IRS Set to Audit Harvard's Investments

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How Washington Will Mess with Your Money in 2010

By , Global Investing Specialist, Money Morning -

In this era of growing government involvement, it's no surprise that Washington is poised to be the biggest economic wild card of the new year.

Indeed, investors who are trying to estimate the impact that politics will have on their portfolios in 2010 are likely finding this attempt at analysis to be an exercise in futility.

If that's been the case, read on: Political pundits - even those who claim to be impartial - spend a lot of time trying to score points for their side. But they aren't really that interested in the economic aspects of the endless battle. I certainly don't claim to be any more unbiased than the next person. However, I thought it worth trying to take an educated guess at what will actually happen, and what it will mean for our money.

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Obama's Budget Blueprint: What We're Paying for, and How We're Paying for it

By , Managing Editor, Money Morning -

By Jason Simpkins Managing Editor Money Morning U.S. President Barack Obama yesterday (Thursday) outlined a the $3.94 trillion budget plan that includes a $1.75 trillion deficit in the current fiscal year ending Sept. 30, and that plans for a $1.17 trillion deficit for fiscal 2010. The new U.S. president sent his fiscal 2009 budget blueprint […]

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