US stares at a $1 trillion deficit. How bad is that?

[LiberalNation]

:dunno:

http://news.yahoo.com/s/csm/20081016/ts_csm/adebt;_ylt=AvxnnHCdgLuWa4RMsd2WCBF34T0D

NEW YORK - The US government's extraordinary effort to rescue the banking system may have pulled America's economy back from the brink, but it comes at a cost – helping to push an already bloated deficit up to an estimated $1 trillion for this fiscal year.

That would be a record in today's dollars – and would represent the highest level of federal red ink as a share of the overall economy of any US budget since the 1940s. For each household, this year's deficit would pile on an extra $8,620 of federal debt.

As a result, future presidents may have to rein in spending and raise taxes to pay down that debt. If they don't, foreign lenders at some point could scale back their purchases of US debt, sending interest rates soaring.

"There are times when you need to run up the deficit and this is one of them," says Maya MacGuineas, president of the Committee for a Responsible Federal Budget, a nonpartisan group in Washington that came up with the $1 trillion estimate. "But we ran them up when we did not need to, and we have no plan to stop running them up. We have become serial deficit spenders."

It could be worse. The rising estimates of the deficit are based in part on the calculation that tax revenues will shrink as the economy contracts and unemployment rises. If the recession is less severe because of the bank rescue, then the deficit will be smaller. If Congress enacts a new economic stimulus package, the deficit could go up.

[red states rule]

http://punditkitchen.files.wordpress.com/2008/10/political-pictures-us-senate-emptying-treasury-complete.jpg

and Dems tinkering with the banking system to make home ownership a right and not something that has to be earned

[red states rule]

The deficit is not $1 trillion. Thank you Sen Reid and Ms Pelosi for cutting spending like you promised in 2006



Budget deficit in 2008 surges to all-time high
By MARTIN CRUTSINGER – 2 days ago

WASHINGTON (AP) — The federal budget deficit soared to $454.8 billion in 2008 as a housing collapse and efforts to combat the economic slowdown pushed the tide of government red ink to the highest level in history.

The Bush administration said Tuesday the deficit for the budget year that ended Sept. 30 was more than double the $161.5 billion recorded in 2007.

It surpassed the previous record of $413 billion set in 2004. Economists predicted a far worse number next year as the costs of the government's rescue of the financial system and the economic hard times hit the nation's balance sheet.

Some analysts believe that next year's deficit could easily top $700 billion, giving the next president a formidable challenge.

http://ap.google.com/article/ALeqM5gEiJcU7rR0o8aFOk3fXoM29cpGbQD93QHUSO0

[No1tovote4]

Bad enough. Too pay the "pay as you go" promise fell on the very first vote they had and we have two candidates who rush to promise to "spend" more money we don't have on ever increasing government.

We're screwed.

[red states rule]

Bad enough. Too pay the "pay as you go" promise fell on the very first vote they had and we have two candidates who rush to promise to "spend" more money we don't have on ever increasing government.

We're screwed.

Dems have kept few of their promises they made in 2006.

As far as taxes and spending here are a few of the broken promises

Promise: “Democrats offer a New Direction which includes fiscal responsibility.” – Democratic Caucus Chairman James Clyburn, Press Release, October 10, 2006

Promise: “We will work together to lead the House of Representatives with a commitment to integrity, to civility, and to fiscal responsibility.” – Speaker-Elect Nancy Pelosi (D-CA), Press Release, November 16, 2006

Promise: “It is imperative to the future of our nation that we come together – Democrats and Republicans – and restore fiscal responsibility.” – Majority Leader Steny Hoyer (D-MD), Press Release, January 23, 2007

Broken Promise: “[Now-Democratic Whip James Clyburn (D-SC)] also said he loves appearing in the [Citizens Against Government Waste] Pig Book. ‘I want to be there as often as I possibly can for as much money as I possibly can,’ he said.” – “Clyburn Defends Budget Earmarks,” The Post and Courier (Charleston, SC), February 21, 2007

Broken Promise: “…Democrats resorted to begging, threatening and, worst of all, bribing members for their votes with $21 billion in pork-barrel projects…Loading a bill that’s supposed to keep our soldier in bullets, boots, and beans with pork-barrel bribes for congressional colleagues must be a low point in the history of the U.S. Congress. This destroys any pretense Democrats have to being a party of fiscal responsibility and good government.” – “Buying Votes; Military Funding Bill a Stain on Congress,” The Gazette Editorial (Colorado Springs, CO), March 27, 2007

Broken Promise: “It’s hard to say which is worse: [Democratic] leaders offering peanuts for a vote of this magnitude, or members allowing their votes to be bought for peanuts.” – “Pork Has No Place in ‘Emergency’ War Bill,” USA Today Editorial, March 22, 2007

DEMOCRATIC PROMISE #50: Keep Taxes Low for Middle-Class Families
Promise: Then-Minority Leader Nancy Pelosi (D-CA) promised, in response to a reporter’s question, that House Democrats would not raise taxes on middle-class families:

QUESTION: If Democrats do take back control of Congress, how concerned should the average American be about a possible increase in his or her taxes?

PELOSI: “Not at all. Democrats are talking about no deficit – we’re talking about fiscal responsibility.” – Press Conference, July 28, 2006

Broken Promise: “Democrats also put their stamp on managing the country’s finances with [a budget] effectively resulting in the largest tax increase in history.” – “Report Card; Sound, Fury Outweigh Substance So Far,” The Oklahoman Editorial, April 2, 2007. The Democrats’ budget includes a tax hike of at least $217 billion by fiscal year 2012, and includes a tax hike “trigger” that would reimpose the marriage penalty and cut the child tax credit in half, tax hikes that would have a direct impact on middle-class families.

DEMOCRATIC PROMISE #51: Expand the Child Tax Credit
Promise: “In an Oct. 5 speech at Georgetown University, House Minority Leader Pelosi pledged to make the child tax credit more generous for lower-income families…” – “Taxes – Democrats Would Pare the List of Potential Tax Changes,” CongressDaily PM, October 19, 2006

Broken Promise: “The Senate budget resolution (S Con Res 21) included an amendment by Finance Chairman Max Baucus, D-Mont., that proposes using a $132 billion projected fiscal 2012 surplus to pay for extending the tax cuts, such as those affecting married couples, the child tax credit and estate tax changes. The House version (H Con Res 99) does not make room for those tax provisions which expire in 2010.” – “Tax-Cut Proposal Rides With House-Adopted Fiscal 2008 Budget Resolution,” Congressional Quarterly, May 8, 2007

The Washington Post also reported earlier this year that “[W]hile House Democrats say they want to preserve key parts of Bush's signature tax cuts, they project a surplus in 2012 only by assuming that all of the cuts expire on schedule in 2010.” – “Budget Plan Wipes Out Deficit But Leaves $50 Billion Dilemma,” Washington Post, March 29, 2007

http://republicanleader.house.gov/brokenpromises/p_fiscal.html

[5stringJeff]

And anyone voting for either Republicans or Democrats will be voting for more and more and more deficits. Neither party cares about the ever-growing national debt.

[Kathianne]

I have been concerned about inflation down the road, but seems those who actually understand economics are more concerned about the inverse:

http://online.wsj.com/article/SB122428776277746551.html?mod=googlenews_wsj


* OCTOBER 18, 2008

Amid Pressing Problems, Threat of Deflation Looms
By SUDEEP REDDY


Policy makers navigating the U.S. through the global credit crisis may have a new concern on the horizon for 2009: deflation.

The risk of deflation -- generally falling prices across the economy, beyond volatile energy and food costs -- remains slim. But the financial shock and a faltering economy can set the stage for a deflationary environment.

Federal Reserve officials view broad-based deflation as unlikely but possible. Federal Reserve Bank of San Francisco President Janet Yellen said in a speech this week that the plunge in oil prices along with slackening demand for labor and goods should "push inflation down ....