Browse by Tags

Forecasts & Trends

Blog Subscription Form


    • The National Debt Is Over $18 Trillion, Not $13 Trillion

      In June, the non-partisan Congressional Budget Office (CBO) released its annual “Long-Term Budget Outlook” which concluded yet again that the trajectory of US federal debt is “unsustainable” and will lead to an unprecedented debt crisis in the years ahead.

      After running $1+ trillion annual budget deficits in fiscal years 2009-2012, the deficits have come down significantly in the last few years, to $483 billion in FY2014, down from $1.3 trillion in 2011. However, the CBO warns in its latest report that the debt will start to ratchet significantly higher in a few more years if major changes are not made soon.

      The CBO estimates that “debt held by the public” will rise to 78% of Gross Domestic Product by 2025 and 103% of GDP by 2040 – assuming its long-term assumptions hold true. Several of those assumptions are dubious in my opinion. The CBO admits as much and offers an alternative fiscal scenario which shows the debt rising to over 100% of GDP much sooner.

      The problem I have always had with the CBO’s debt numbers is that they only consider the debt held by the public, which is currently apprx. $13.1 trillion. The CBO does not include the additional apprx. $5.2 trillion of so-called “intra-governmental debt” which is owed by various governmental agencies including Social Security.

      If we add the intra-governmental debt, then our national debt leaps to apprx. $18.3 trillion today, which is actually larger than our GDP of $17.7 trillion at the end of 2014. So our real debt-to-GDP ratio is already above 100%! That’s what we will talk about today. All Americans should understand what follows.

      Finally, it is widely agreed that the latest nuclear agreement with Iran is a victory for the Iranians and a dangerous setback for the West, thanks to President Obama. While I don’t have space to address it today, be sure to read the first link in SPECIAL ARTICLES below which points out 16 reasons why this was a very bad deal.

      This is just another example that illustrates how our president does not have America’s best interest at heart.

      Filed under: ,
    • President Proposes $4 Trillion Budget & New Tax Increases

      Most every year about this time, I criticize the sitting President of the United States for submitting an ever-larger federal budget that almost always includes a big deficit which adds to our massive national debt. I have criticized every president for this going all the way back to Ronald Reagan who also ran budget deficits, especially in his second term. Yes, I even criticized “The Gipper” who sparked my initial interest in politics way back in 1976.

      Given my long history of speaking out on this issue, I see no reason to make an exception today. On Monday, President Barack Obama submitted the largest proposed federal budget in history to Congress. In the past, most presidents who were shellacked in the mid-term elections tended to compromise in order to work with the opposition in Congress. Not this president!

      The president’s proposed federal budget for fiscal year 2016 is a whopping $3.99 trillion which would increase spending for government agencies by a whopping 7% and includes numerous onerous tax increases to pay for most of it. Yet even with the tax increases, the FY2016 deficit is projected to be $474 billion.

      The reality is that this is all simply political theatre. The president knows he won’t get nearly all of the new spending increases and taxes on the wealthy and corporations he proposes, what with a Republican-controlled Congress. But he does throw a very large bone to his liberal political base, while making the Republicans look like the “Party of No.” 

      In any event, I’ll briefly summarize the president’s latest record-large budget proposal today, and you can make of it what you will. But before we go there, let’s take a look at last week’s disappointing 4Q GDP report and what transpired at the Fed’s first policy meeting of 2015.

      Filed under: ,
    • Government Spent $29,000 Per US Household in 2014

      A new study from The Heritage Foundation found that out-of-control spending in Washington amounted to more than $29,000 per household in fiscal year 2014. Today, I will reprint the highlights of that excellent report. As you will see below, government spending has topped $3.5 trillion in each of the six years that President Obama has been in office.

      The budget deficit for FY2009 more than tripled to over $1.5 trillion, thanks in large part to Obama’s $800+ billion “stimulus program” which did little to create new jobs or spark the economy. Budget deficits remained above $1 trillion for 2010, 2011 and 2012. While deficits have come down significantly in the last two years, our debt trajectory remains on a collision course as the latest Heritage Foundation study illustrates.

    • 2013 Federal Budget Deficit Plunges – How, Why?

      It was so tempting to devote today’s E-Letter to a discussion about all of the scandals plaguing the Obama adminstration in recent weeks. In fact, some of my staff were very disappointed that I chose not to go there. My feeling was that the airwaves are so saturated with coverage of the Obama scandals, you might not want to see even more piling on from me, as much as I would like to. (There are some very good stories on the latest scandals in SPECIAL ARTICLES below.)

      Today, we’ll focus on the latest news that this year’s federal budget deficit will likely be significantly lower than previously estimated by the Congressional Budget Office, and the reasons why that is. But let us not be fooled into thinking that falling deficits are a permanent thing. No, in fact, the deficits and the national debt will continue a troubling increase over the next decade and even longer.

      We’ll also discuss the subject of our nation’s “unfunded liabilities” which now stand at a staggering $123 trillion, which is rarely ever mentioned by the media. And there are several other interesting points I will touch on today, but I don’t want to give everything away in this introduction. So please read on.

      Filed under: ,
    • Fed to End QE, Obama’s Tax & Spend Budget

      Today I tackle several topics, each of which could take up an entire E-Letter. But these topics are very important, and I want to address them today. The first is the minutes from the March 19-20 Fed Open Market Committee meeting that were released last Wednesday. Those minutes definitively confirm that the Fed is ready to chart an end to quantitative easing.

      The second topic is President Obama’s proposed federal budget for fiscal 2014 that was also released last Wednesday. The Obama administration claims that the latest budget proposal will cut the federal deficit by almost $1.2 trillion over the next 10 years. It will not. Furthermore, his new budget proposal would raise taxes and fees by over $1.1 trillion over the next decade. And that’s just for starters.

      But before we go there, I want to touch on new data which confirms that US economic growth in the current recovery has been the weakest EVER, since 1930 when such data was first recorded – even worse than after the Great Depression. The recent Great Recession officially ended in the 2Q of 2009 – true enough. But growth since then has been the slowest on record.

      That’s a lot to cover in one letter, so let’s get started.

      Filed under: , , , , ,
    • On Obama’s 2013 Budget & the Crisis in Greece

      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!

    • Social Security Insecurity

      As the federal budget continues to be a concern for every American taxpayer, I have noticed recently that there seems to be a lot of confusion regarding the effect of Social Security on the budget process. We know that Social Security and Medicare were set up to be self-funded from payroll taxes, but some of the recent budget debate has centered around the payment of Social Security benefits.

      For example, is the Social Security system currently running a deficit or a surplus? I have seen articles claiming that each is true. I have also read accounts of how paying benefits will increase the deficit, and even that redeeming bonds from the trust fund will increase the total national debt. In this week's E-Letter, I'm going to try to answer some of these questions as well as clue you in on how to read references to these budgetary items.

      On the subject of Social Security and retirement in general, I'm also going to discuss AARP's apparent reversal of its long-held stand against cutting Social Security benefits, and why AARP is now in full damage control mode. Finally, I'll bring you up to speed regarding new proposals to tax and/or confiscate your retirement account assets. In an effort to plug the deficit holes, Congress seems to be willing to make a bad situation even worse.

    • Obama Budget Adds $9.5 Trillion to US Debt

      On March 18, the Congressional Budget Office estimated that President Obama’s 10-year budget proposal will add at least $9.5 trillion to the national debt over the next 10 years, if enacted. Of course, if you read my February 22 E-Letter, you already knew that. Like a lot of other analysts, I don’t believe that it will be remotely possible to add almost $10 trillion to the national debt over the next 10 years.The bond market won’t stand for it, much less the foreigners that own almost 50% of our national debt held by the public. I will discuss the CBO's latest estimates as we go along today.

      Dallas Federal Reserve Bank President, Richard Fisher, went public recently with his serious concerns about the US debt trajectory. He warned that the US is now at a debt "tipping point" and added that if we don't change course, the US "will become insolvent." Fisher also let it be known that he opposes QE3 when QE2 ends in June. This raises the question of what will happen in the economy and the markets when QE2 ends in two months. I have some thoughts on that question below.

      Next, we take a look at just how enormous the spending cuts would have to be to remotely balance our federal budget, which will see a deficit of at least $1.65 trillion this year. It doesn't take a rocket scientist to figure out that there's no way to balance the budget without cutting entitlements. And that brings us back to the question: Do Americans really want serious spending cuts? Some recent polls are not encouraging, unfortunately. In any event, it should make for interesting reading.

    • Obama’s New Budget - He Just Doesn’t Get It!

      A Gallup poll taken the week before Obama announced his 10-year budget proposal found that 68% of Americans disapprove of Obama’s handling of federal deficits, the highest disapproval rating ever recorded on this particular question. Put differently, over two-thirds of Americans say they want federal spending cut, not increased.

      Yet on February 14, just days after the Gallup poll, President Obama unveiled a 10-year budget proposal that will add at least $9.4 trillion to our already $14.1 trillion national debt. It was the largest 10-year budget proposal on record. Obviously, Obama did NOT get the message that voters sent in the mid-term election or the latest Gallup poll noted above.

      The question is, what could have Obama been thinking? Why would he propose adding almost $10 trillion to our national debt at a time when over two-thirds of Americans want federal spending reduced? Does he want to be a one-term president? I have a theory as to why he did this, and it may surprise you. That’s why you’ll definitely want to read this week’s E-Letter.

    • It’s Now or Never for the Democrats


      1.  The “Must-Do” Lame Duck Agenda

      2.  The “Won’t Do” Agenda

      3.  Liberal Causes Flying Under the Radar

      4.  Conclusions

    • The Mother of All Budget Deficits

      President Obama unveiled his fiscal year 2011 federal budget last week, and it is another whopper. If approved, he would spend a record $3.83 trillion and run a deficit of at least another $1.3 trillion. The actual deficit could be much higher because his assumptions about the economy are considerably too optimistic in my opinion and that of many economists. Obama's new budget projections now show that the budget deficit for FY2010, which ends on September 30, will be much higher than previously forecast - a whopping $1.6 trillion. This week, we will examine the implications of trillion dollar deficits as far as the eye can see.