National Debt

[Trumpetmaster]

It's official. The Deficit has now risen above the $1 trillion mark. This is more than double the record amount, back when the Democrats who now control Congress were telling us that spending was 'out of control'...

...and it will almost double before the end of the year!!!

I smell bankruptcy...

[Haggis@wk]

[Trumpetmaster]

Haggis,
Cannot see what you posted...
TM

[Trumpetmaster]

Haggis,
Never mind.. I opened it in a new window... UGH.. technology..
Give me a Bronto-Burger

[Haggis@wk]

This is the first June since 1997 when we didn't have positive tax receipts



Productive individuals, entrepreneurs, and small businesses are the engine of the U.S. economy, not the government and certainly not this government. Watch what happens to our standard of living when these factors are eliminated.

Stand by for a VAT tax in addition to the income tax. This recovery is going to be brutal and in all honesty I don't believe, based on the current state of proposed legislation, that our children will ever see a return to the level of prosperity we had.

Elections have consequences.


The source data from Treasury is here.

[Shapley]

Must be those da**ed Bush tax cuts...

[dai bread]

"Stand by for a VAT tax in addition to the income tax."

When GST (aka VAT) was introduced here, we got a substantial cut in income tax to off-set it. 16% if memory serves, though it was while ago now. GST was 10%.

If you guys get an expenditure tax, make sure you get a good income tax cut. Also make sure it's a uniform rate, and there are few if any exceptions. The main ones here are financial transactions (e.g. bank interest) and exported goods. If you don't, it's an administrative nightmare, requiring an army of VAT inspectors to police. Ask the British.

I'm all in favour of expenditure taxes. We are constantly exhorted to save, but how can we when we have to do it out of tax-paid income? At least with an expenditure tax you get the option- spend & pay tax, or save, and don't pay tax. People say expenditure taxes are regressive, but there's more tax on a Rolls-Royce than a Ford, so I disagree.

[Haggis@wk]

Dai,
The income tax is going to increase automatically when the Bush tax cuts expire and the VAT will be in addition to the income tax, not a replacement.

[Shapley]

Democrats will not let go of income tax, as it gives them too much power to perform social engineering. Also, unless the Sixteenth Amendment to the Constitution is repealed, any elimination of the income tax would be temporary, as they would hold 'in reserve' the power to re-impose it at the next 'crisis'. That 'crisis' could be real or imagined.

[dai bread]

Dai,
The income tax is going to increase automatically when the Bush tax cuts expire and the VAT will be in addition to the income tax, not a replacement.

Oh dear. I'd fight that.

[Haggis@wk]

Dai,
The income tax is going to increase automatically when the Bush tax cuts expire and the VAT will be in addition to the income tax, not a replacement.

Oh dear. I'd fight that.

Here is the anticipated tax rates

[dai bread]

Taking 39% income tax, 12.5% GST on the remainder (assuming it's all spent) and adding in 3% for Accident Compensation levy (which I don't want to explain here) our top tax take comes out to about 50%, on a par with Japan and Illinois.

[Haggis@wk]

url=http://apnews.myway.com/article/20090720/D99I4A0G0.html]Rubber, meet road:[/url]
White House putting off release of budget update.

“The White House is being forced to acknowledge the wide gap between its once-upbeat predictions about the economy and today’s bleak landscape. . . . The release of the update – usually scheduled for mid-July – has been put off until the middle of next month, giving rise to speculation the White House is delaying the bad news at least until Congress leaves town on its August 7 summer recess. The administration is pressing for votes before then on its $1 trillion health care initiative, which lawmakers are arguing over how to finance.”

[Shapley]

Obama, Cabinet To Seek $100M Budget Cuts

President Obama plans to convene his Cabinet for the first time today, where he will order members to identify a combined $100 million in budget cuts over the next 90 days, according to a senior administration official.

The budget cuts, while they would account to a minuscule portion of federal spending, are intended to signal the president's determination to cut spending and reform government, the official said.

Today makes day 90, if my count is correct. Since these are meant to 'signal the president's determination', I would expect a determined president to announce those cuts promptly. So far, he's been very quiet about it. I look forward to his prime-time announcement of these promised savings. $100 Million may seem like a drop in the bucket when we're talking about being $1 trillion in the red so far this year, but it's a start. After all, he is determined to 'signal his determination'...

[Shapley]

Tab For Bailouts Could Total $23.7 Trillion, Watchdog Warns

It would probably have been cheaper to just let them fail, but the idea that they were 'too big to fail' is resulting in a debt that is too big not to...

[Haggis@wk]

"We are now in the early stages of a depression. The economic indicators we follow to track real economic activity are all signaling a slowdown of massive proportions. You wouldn’t know it reading the mainstream papers of course – they all focus on the relative decline in the slowdown’s intensity."

In short, the Obama-Pelosi-Reid Stimulus package that was passed, sight unseen, is an unmitigated Keynesian disaster:

Government Tax Revenue Declining:
· 32 of the 46 states whose fiscal year ended midnight July 1, 2009, did not have budgets signed by their Governors. States are grappling with deficits totaling a collective $121 billion...
· Personal income tax, which accounts for more than a third of state revenues, dropped by 26% in the first four months of 2009...
· The US government has spent $2.67 trillion thus far in fiscal 2009, but has only collected $1.59 trillion...
· The US government collected $685.5 billion in individual income taxes so far this year, a 22% drop from the $877.8 billion the government took in during the first nine months of 2008...
· US corporate income taxes plunged 57% to $101.9 billion in 2009, down from $236.5 billion in the first nine months of fiscal year 2008...

Retail Sales Slump:
· The International Council of Shopping Centers (ICSC)/Goldman Sachs same-store sales tally for June was down 5.1% from June 2008, worse than the latest forecast for a 4.5% decline.
· Privately held luxury department store Neiman Marcus Group Inc. posted a 20.8% drop in same-store sales. Abercrombie & Fitch Co.'s same-store sales fell 32%, even more than the 26.6% decline Wall Street had projected. 6

Unemployment Catastrophe:
· The June 2009 jobless rate reached 9.5%, the highest since 1983.
· 4 million Americans have been looking for work for more than 26 weeks, representing 29% of the unemployed – the most since records began in 1948.
· During the last 30 years, Americans who lost their jobs took an average 15.8 weeks to find new positions. In June 2009, the average duration of unemployment was 24.5 weeks, the longest since records began in 1948.
· The number of people collecting unemployment benefits reached a record 6.88 million in the week ended June 27, 2009.
· Approximately six people are seeking work for every job opening, the most since the government began keeping such records...

I'm still buying gold.

[Haggis@wk]

The Fundementals Still Suck

I believe the global economy will fall back into a deep, deep recession by late 2010 or early 2011 mainly because of rising government debt, higher oil prices and a lack of job growth.

I'm buoyed by the news that Cap and Trade and ObamaCare will probably not pass. If either does, especially C&T the recession will begin by next Summer, if not there will be a sucker's rally that won't run out of steam until later in the year.

The fundementals don't lie, we are in desparate straits. I knew we were in real trouble when the MSM taked about the June "surge" in housing purchases. The "surge" was equal to the housing market in 1982. The MSM will keep this sucker's rally going because they can't diss Obama. But it will end.

I plan to be 90% out of the stock market by then. What few capital gains I will receive will be more than offset by selling the "blue chip" stocks I inherited from my aunt, down 70%. It was a blessing that she died when she did, she'd be a pauper today.

I plan to hang onto gold and foreign oil stocks and a few other recession resistant stocks.

[jamiebk]

"We are now in the early stages of a depression. The economic indicators we follow to track real economic activity are all signaling a slowdown of massive proportions. You wouldn’t know it reading the mainstream papers of course – they all focus on the relative decline in the slowdown’s intensity."

In short, the Obama-Pelosi-Reid Stimulus package that was passed, sight unseen, is an unmitigated Keynesian disaster:

Government Tax Revenue Declining:
· 32 of the 46 states whose fiscal year ended midnight July 1, 2009, did not have budgets signed by their Governors. States are grappling with deficits totaling a collective $121 billion...
· Personal income tax, which accounts for more than a third of state revenues, dropped by 26% in the first four months of 2009...
· The US government has spent $2.67 trillion thus far in fiscal 2009, but has only collected $1.59 trillion...
· The US government collected $685.5 billion in individual income taxes so far this year, a 22% drop from the $877.8 billion the government took in during the first nine months of 2008...
· US corporate income taxes plunged 57% to $101.9 billion in 2009, down from $236.5 billion in the first nine months of fiscal year 2008...

Retail Sales Slump:
· The International Council of Shopping Centers (ICSC)/Goldman Sachs same-store sales tally for June was down 5.1% from June 2008, worse than the latest forecast for a 4.5% decline.
· Privately held luxury department store Neiman Marcus Group Inc. posted a 20.8% drop in same-store sales. Abercrombie & Fitch Co.'s same-store sales fell 32%, even more than the 26.6% decline Wall Street had projected. 6

Unemployment Catastrophe:
· The June 2009 jobless rate reached 9.5%, the highest since 1983.
· 4 million Americans have been looking for work for more than 26 weeks, representing 29% of the unemployed – the most since records began in 1948.
· During the last 30 years, Americans who lost their jobs took an average 15.8 weeks to find new positions. In June 2009, the average duration of unemployment was 24.5 weeks, the longest since records began in 1948.
· The number of people collecting unemployment benefits reached a record 6.88 million in the week ended June 27, 2009.
· Approximately six people are seeking work for every job opening, the most since the government began keeping such records...

I'm still buying gold.

You guys crack me up....a year ago I could not convince one of you that we were even in a recession

[Shapley]

You guys crack me up....a year ago I could not convince one of you that we were even in a recession

A year ago we weren't in a recession...

I'll expand on that comment. In the first and second quarters of 2008, we still had GDP growth. .9% in Q1, and 2.8% in Q2. In Q3, we had a .05% loss of GDP signaling the possible beginning of a recession. Two quarters of GDP loss are required for a recession, by definition. Q4 had a loss -6.3%, indicating that we were 'officially' in a recession. The question then comes down to when that actual recession began. Some economists would put that at the start of Q3, that is to say 1 July 2008, since that was the beginning of the fist quarter of negatvie GDP growth. Others, the ones I agree with, would put the beginning of the recession at the point at which GDP growth actually passed below zero. This is more accurate, but harderd to define, since we do not have daily, weekly, or even monthly figures for actual GDP growth. However, the indications seem to point to the economy slipping into negative numbers sometime in late August or Early September 2008.

Now, there are those who try to peg the beginning of the recession at the point at which GDP growth rate began to recede, not the point at which actual GDP began to recede. Attempting to use this basis does not square that classic definition of 'recession', and should be rejected.

We were on the road to recession for some time. I actually place the start of that journey as October 1, 2007, which was the date we first began operating under the Pelosi-Reid budget. My claim is supported by the Dow Jones Industrial Average, which began its long decline a week later. However, being on the road to recession is not the same as being in recession. There were plenty of opportunities to turn around and head down a different road, Neither President Bush nor the Democrat-controlled congress saw fit to change direction. President Bush, for his part, should have used his veto pen, and pushed harder for actions to contain it. The Democrats in congress were more concerned with denying the president any type of victory to concern themselves with actually trying to serve the people and/or avoid financial catastrophe.