Religions > Atheism > AP: AWOL's FIscal Recklessness Hurts the Economy (GOP, The Party of Treason)
| Topic: |
Religions > Atheism |
| User: |
"Yang, AthD h.c, Kicking AWOLs Cocaine Snorting Ass" |
| Date: |
15 Jan 2006 09:29:36 PM |
| Object: |
AP: AWOL's FIscal Recklessness Hurts the Economy (GOP, The Party of Treason) |
GOP: a group of people who would sell their children down the river so
they can get a tax cut now.
http://news.yahoo.com/s/ap/20060115/ap_on_bi_ge/fiscal_fitness
WASHINGTON - Like a person packing on pounds, the United States keeps
adding to its flabby budget deficits, endangering the nation's
economic health and the pocketbooks of ordinary Americans. Here's the
worry: Persistent deficits will lead to higher borrowing costs for
consumers and companies, slowing economic activity.
ADVERTISEMENT
As Uncle Sam seeks to borrow ever more to finance those deficits,
rates on Treasury securities would rise to entice investors. That
would push up other interest rates, such as home mortgages, many auto
loans, some home equity lines of credit and some credit cards.
"That's the pocketbook risk to the American consumer," said Greg
McBride, a senior financial analyst at Bankrate.com, an online
financial service.
For businesses, rates on corporate bonds would climb. It would become
more expensive to borrow to pay for new plants and equipment and other
capital investments.
With a succession of budget deficits, "you do expect to see higher
interest rates. Where we fight about this is over how big the effects
are. But they are definitely there," said James Feyrer, assistant
economics professor at Dartmouth College.
The government's budget deficit last year was $319 billion. While
smaller than the record $413 billion in 2004, it still was the
third-highest ever.
A White House budget official now predicts that the deficit in the
current budget year will top $400 billion, pushed up by the costs of
the Gulf Coast hurricanes. The red ink is expected to keep flowing for
years.
The nonpartisan Congressional Budget Office forecasts deficits
every year through 2015; that is as far out as the office projects.
The White House forecast, which runs to 2010, also expects annual
shortfalls.
"The budget deficit is like gaining weight. You are not really aware
of it until at some point, all of a sudden you can't do what you want
to do because you are heavier. Interest rates go up and slow things
down," said Brian Bethune, economist at Global Insight. "Then you go
to your check up and the doctor tells you you got to lose 25 pounds."
America's economic doctor is Federal Reserve Chairman Alan
Greenspan.
Greenspan, who retires Jan. 31 after 18-plus years at the central
bank, repeatedly has urged Congress and the Bush administration to get
the country's financial house in order.
Bloated budget deficits, if not curbed, could endanger the economy
over the long term, Greenspan warned. Increased government borrowing
would drive up interest rates and weigh down economic activity.
"In the end, the consequences for the U.S. economy of doing nothing
could be severe," he said recently.
The looming retirement of 78 million baby boomers will put massive
strains on the country's finances, Greenspan said.
In 2008, the oldest of the boomers will reach 62, the earliest age at
which they can tap Social Security retirement benefits. Three
years after that, in 2011, they will reach 65 and become eligible for
Medicare.
Ben Bernanke, chosen by President Bush to succeed Greenspan, also
believes the situation is troubling and that the deficits need to be
controlled.
"Budget deficits are a problem," he said. "I think it's important to
continue to reduce budget deficits."
The administration has a goal of cutting the deficit in half by 2009
and plans to do that by restraining spending. The president,
meanwhile, is continuing to press Congress to make his tax cuts
permanent.
Democrats mostly blame Bush's tax cuts for the government's red ink.
The last time the government recorded a surplus was in 2001.
In a worst-case scenario, foreigners who finance the U.S. budget and
trade deficits would sour on U.S. investments and unload their
holdings. The prices of U.S. stocks and bonds could plunge. Interest
rates, including those for mortgages, could soar. A financial crisis
could confront the country.
Economists are troubled by the prospects of budget deficits as far as
the eye can see and want to see them trimmed. But the size of the
current budget deficits, while unwelcome, do not signal that a crisis
is imminent, they said.
An important barometer is the size of the federal debt — now about $8
trillion — relative to the overall economy, as measured by gross
domestic product. Under that measure, this debt accounts for around
63.2 percent of GDP, Bethune said.
"Generally speaking, when it is over 75 percent of GDP, then the
yellow flag goes out. I would say 95 percent of GDP and over is
definitely a red flag," Bethune said.
The government produces a budget deficit when its total spending
exceeds its total revenues. Budget deficits cause the government to
borrow more money by selling Treasury securities to domestic and
foreign investors. That additional borrowing increases the
government's debt.
Despite the recent string of large budget deficits, long-term interest
rates in the U.S. have behaved well. In fact, relatively low long-term
rates around the world have puzzled economists and spawned a number of
theories. Some experts believe too little investment worldwide may be
behind this; others believe too much savings is the reason.
From an economic point of view, there is more concern about higher
borrowing costs over time crimping business investment and ultimately
the production of goods and services, economists said.
"Low investment is bad. That's going to mean lower productivity and
lower production in the future, which has a cost on society," said
Erik Hurst, associate professor of economics at University of
Chicago's Graduate School of Business.
People who save would benefit, assuming inflation stayed under
control. If the deficits fanned inflation, then the Fed would need to
boost interest rates, pushing a whole range of borrowing costs even
higher.
-----
Yang
a.a. #28
AthD (h.c.) conferred by the regents of the LCL
a.a. pastor #-273.15, the most frigid church of Celcius nee Kelvin
EAC Econometric Forecast and Sorcery Division
Proudly plonked by Lani Girl and Crazyalec (aka aka Yang's little poltregeist *****)
The Bush 'balanced' budget: 2 trillion and worsening
The Bush 'economic' policy: 12.5 million FEWER jobs than Clinton and counting
The Bush Iraq lie: -2216 GIs, one friend's co-worker's son and mounting
Having Bush ***** up my country: Worthless
-----
Contact duke's priest and ask
him why duke is such a racist:
http://www.stpatrickbr.org/
Father Gerard "Jerry" Martin
stpatrickbr<AT>bellsouth<DOT>net
Saint Patrick Catholic Church
12424 Brogdon Lane
Baton Rouge, Louisiana 70816
.
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