Today we begin by looking at President Obama's new federal budget request for FY2013, which begins on October 1. To the surprise of no one, he's asking for a record $3.8 trillion to spend in 2013. Also to the surprise of no one, his new budget calls for a myriad of tax increases, especially on families making over $250,000 a year. The budget does include some spending cuts, but remember that in Washington, a slowdown in funding growth qualifies as a spending cut.
The federal budget deficit for 2012 is now estimated to be $1.3 trillion, marking four consecutive trillion-dollar budget deficits under Obama. But wait, the deficit for 2013 is only supposed to be $901 billion. Obama's new budget offers projections for the next decade, and the budget deficit never falls below $500 billion over the next 10 years.
Next, we turn to Greece and the latest passage of a new round of austerity measures, spending cuts and more government layoffs in order to qualify for a new EU/IMF bailout loan of €130 billion ($173 billion). The loan will ensure that Greece does not default next month when a big bond bill comes due. While €130 billion should tide Greece over for awhile, the struggling nation will need more bailout money before year-end. It remains to be seen how long the EU nations will continue to write checks.
It also remains to be seen what will happen in Greece's national elections in April. Given the massive demonstrations and torching of buildings that happened over the weekend, today's Greek leaders are almost certain to be kicked out of office. If they are replaced and the new leaders reverse the austerity programs, then Greece will default and withdraw from the EU. If that happens, it will be very ugly!