Are US government spending and budget deficits now totally out of control?
*Reuters, by Richard Cowan & Kim Dixon, January 26, 2011:
''The U.S. budget deficit this year will jump nearly 40 percent over
prior forecasts, mostly due to the mammoth tax-cut package brokered by
President Barack Obama and lawmakers last month, the Congressional
Budget Office said on Wednesday.
The CBO said the fiscal 2011 deficit will hit $1.48 trillion, up from
last August's $1.07 trillion estimate, which was crafted before
Bush-era tax rates were extended at a cost of $858 billion over 10
years.
'The United States faces daunting economic and budgetary challenges,'
the CBO said.
The new forecast is part of a semi-annual economic review by the CBO,
the nonpartisan budget analyst for Congress.''
''The severe impact of annual budget deficits was noted by CBO Director
Douglas Elmendorf, who wrote in an Internet posting that 'debt held by
the public will probably jump from 40 percent of GDP at the end of
fiscal year 2008 to nearly 70 percent at the end of fiscal year 2011.'
The debt held by the public could keep rising, reaching 77 percent of
GDP in 2021 if current spending and tax policies are unchanged, the CBO
said. Analysts say the United States should strive for a more
sustainable 60 percent public debt to GDP ratio.
'As disturbing as those near-term deficits are, the long-term outlook
is even worse,' Senate Budget Committee Chairman Kent Conrad said.
'It is the deteriorating, long-term outlook that is the biggest threat
to the country's economic security,' Conrad said. 'The fiscal challenge
confronting us is enormous. To solve this problem, it will
require real compromise and a great deal of political will.' ''
"The longer the necessary adjustments are delayed, the greater will be
the negative consequences of the mounting debt, the more uncertain
individuals and businesses will be about future government policies and
the more drastic the ultimate policy changes will need to be,'
Elmendorf said.''
*This information is solely a highlight of the opinion of a third-party publication and is incomplete. Please subscribe to this publication for the full and timely opinion of the author and call a Monex Account Representative for any additional up-to-date information. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.
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