2 months until next budget crisis?
A prominent economist known as 'Dr. Doom' says the country's budget dispute will come roaring back soon.
Without Congressional action, the country will see $110 billion in spending cuts commence on March 1, writes New York University professor Nouriel Roubini in the Financial Times. And just as those spending cuts hit, the U.S. will hit the debt ceiling. "That is only the beginning," he added.
Known as "Dr. Doom" for his dour views on the economy, Roubini won acclaim for predicting the collapse of the housing market and the 2008 recession. Now, he says that 2013 will be plagued by numerous debates on the budget and the economy. Later this year, talk will turn to medium-turn fiscal consolidation, triggering yet another argument between Republicans and Democrats, he adds.
So expect a big fight about entitlements, and a series of little fights over tax reform: Should the US introduce a value added tax? A flat tax? Higher (or lower) income taxes? A carbon tax? Should we close corporate tax loopholes to raise more revenue? It'll soon get messy.There's more. Amid all the fierce debates on the horizon, there will be real damage to the economy. Roubini and other economists expect that the combination of tax increases, spending cuts and an increase in payroll taxes will eat into the country's economic growth. Roubini estimates that it will translate into a 1.2% of GDP drag on the economy this year.
If the economy was strongly growing at around 3.5%, then that wouldn't be as much of a problem, he said. But recently, the economy has only grown at about 2%.
"So the U.S. could quite easily come perilously close to stall speed this year -- or worse, if the eurozone crisis worsens," he added.
So who's right on this issue, Republicans or Democrats? No one, says Roubini. Even typical Republican voters don't want to gut the welfare state, and "Tea Party extremists are more noise than signal."
He says that maintaining a basic welfare state "is right and necessary" in our age of globalization, rapid technological change and demographic pressure. But doing so means higher taxes for the middle class along with the rich.
It will probably take years for the U.S. to confront the reality of its fiscal position and raise revenues to a level sufficient to fund a reformed -- but not gutted -- welfare state. Large fiscal deficits will remain the norm for the next few years, at least so long as the bond market remains quiet, as I believe it will.
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HOW TO BALANCE OUR BUDGET IN 2013,
#1 Cut all added spending during Bush's term,
Military added $225 billion per year
Tax cut cost $250 billion per year
Medicare D $60 billion per year
TARP $70 billion per year
H L Security $70 billion per year
TSA $8 billion per year
Total annual savings about $700 billion per year,
#2 Add Universal Health care, Federal savings of over $200 billion per year, public savings of $600 billion per year.
Total Federal savings $900 billion--- 2013 projected deficit $900 billion = Balanced Budget, So easy, a Cave Man could do it.
Its just been "kick the can". Where will you be when this house of cards collapses? The good news is the US Army is conducting excersises for when it does. And they won't be handing out MREs and bottled water.
Did anyone notice that this week the DOD OKd the purcahse of over 1,700 F-35s we will never need unless we are invaded by another planet?
I think the biggest "entitlements" are going to Boeing and Lockheed Martin :) $719 Billion last year alone. That's a lot of welfare and food stamps. folks.
ZEPA .... you're not taking into account the ratio of population of Whites to Blacks and Hispanics!! Go back and do the numbers based on percentage of population?? What a moron!
Plus it's spelled bridges?
What brought down the Greek economy is identical to the way our
country is run only on a MUCH larger scale.
The only way out of our economic mess is through tough austerity measures.
Interpretation: much higher taxes and a LOT of spending cuts.
It's a mathematical fact!
How it will effect each individual depends on
whether the individual has had the brains to save for a rainy day.
As they say, when it rains it pours and we're in for a monsoon baby.
How relevant is "Dr. Doom" when he isn't predicting doom? This is a guy who makes a living saying the same thing all the time whether it's true or not. He can't do anything but predict doom because if he did he wouldn't be Dr. Doom anymore.
And what the hell is "medium-turn fiscal consolidation," anyway?
Government exists to grow itself and as long as you people so damned stupidly continue voting for the Democrat-Republican duopoly we will continue to have the status quo. At some point, however, government will collapse under its own weight and I look forward to that day because then is the only time people will almost be ready to deal with it.
Readings on the DOW(monthy basis) going back to 1992...appx.
In Mid 1995...........We crossed the 5,000 mark.
Spring of 1999.......We broke through 10,000
Mid Summer 2007...We pushed through 14,000, then fell back.
By October 2007.....We crossed through 14,000 again, then steadly declined again.
In the Spring of 2009...We started uptrending again.
By October of 2009...We crossed 10,000 for 2nd. time.
Rising ever since...We broke 13,000 in 2012, pushing to the mid/highs of 13,000s.
Remains to be seen if we break all-time highs in 2013 under Obama ?
And eventually push through to 15,000 during his next 4 years...?
I suspect we will...
Why do they want us all to be so scared? We already know it will result in our pockets emptying more, and theirs filling more.
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More than 70 percent of the Class of 2012 took out loans. Oh, and they're seeing high unemployment, too.
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