More “Wonderful” Economic News

| December 9, 2012 | 22 Comments

Well, new US financial figures are out.  And they show that Uncle Sam is in a world of hurt, financially speaking.

And if you thought things were improving:  think again.  It’s looking worse compared to the same period last year.

Since the beginning of the new fiscal year on 1 October, the Federal government has taken in $346 billion in revenue.  That’s actually up roughly $30 billion from last year, or nearly 10%.  So revenue is rising.

However, during that same period the Federal government has spent roughly $638 billion – an increase of $87 billion, or about 14% more than the same period last year.

Short version:  income – $346 billion (+10%); spending – $638 billion (+14%).

Somehow, I just don’t think we’ve had the kind of population growth in a year to warrant that kind of spending increase.  Or that much inflation, either.

I’ll save you the trouble of doing the math.  Since 1 October 2012, the Federal government has borrowed 46 cents of each dollar it has spent.

Why?  That’s primarily due to higher spending on “mandatory” spending – like Social Security, Medicare, and debt interest payments. In other words: the problem is largely due to entitlement programs for the general population and debt interest. Seems these programs are growing faster than expected.  Go figure.

News flash, DC:  at some point, “mandatory” becomes impossible if you can’t come up with the cash.  And it looks like we’re approaching that point PDQ.

But there’s no need to worry.  According to the CBO, the picture is “distorted” by “unbalanced payments”.  The situation’s really better this year than last says the CBO.

Well, here’s my response to the CBO:

When same period last year shows 10% less income but 14% less spending, that doesn’t mean things are getting better – no matter how you try to spin it.  It means things are moving in the absolutely wrong direction and are getting worse.

It also looks like we almost certainly had another $1,000 billion ($1 trillion) Federal deficit for Fiscal 2012, which ended on 30 September.  At the current pace, it looks like that’s almost certainly a lock for Fiscal 2013 as well.  And unemployment is back above 8% again – if it ever really went below 8% in the first place.

At least the current Administration is being consistent.  I’m just not sure that’s exactly the kind of consistency the US wants.

Or needs.

Category: Economy

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  1. PALADIN says:

    Ain’t gonna be pretty when the money DOES run out.
    Wonder what the entitlement whores will do then ?
    One only look at Greece and see the mess , only it will be worse here.
    Not to mention compromising our national security with the cuts that will decimate our capability.

  2. LZ says:

    On the bright side… There’s well…. And uhhhhh…. I’ve got nothing here. If there is a silver lining here China owns it.

  3. Adirondack Patriot says:

    That’s why I say the fiscal cliff is a myth.

    We went over the fiscal cliff in 2009.

    We’ve been in free fall since then.

    We’re just about to hit the ground.

  4. Rerun0369 says:

    Well then,lets hit the ground. Maybe it is what we need to wake the hell up, and realize sacrifice is needed if you want to keep living the way we are now. Shit ain’t free, there is always a cost associated. Thought we already learned this lesson in the 30’s, guess not.

  5. 2-17 Air Cav says:

    The peoples has got what the peoples wanted. Long live the peoples.

  6. CAs6 says:

    Well, all we need to do is mint two $1,000,000,000,000 (yes, trillion) and our problems are solved!

    http://m.gawker.com/5825983/the-trillion-dollar-coins-that-could-save-america

  7. DefendUSA says:

    Or we can just get the Treasury to mint 2 Platinum coins, assign any value it wants and the gov’t obligations are moot for two more years….

    “Under this scenario, the U.S. Mint would produce (say) a pair of trillion-dollar platinum coins. The president orders the coins to be deposited at the Federal Reserve. The Fed then moves this money into Treasury’s accounts. And just like that, Treasury suddenly has an extra $2 trillion to pay off its obligations for the next two years — without needing to issue new debt. The ceiling is no longer an issue.”

    http://www.washingtonpost.com/blogs/wonkblog/wp/2012/12/07/could-two-platinum-coins-solve-the-debt-ceiling-crisis/?print=1

  8. Ex-PH2 says:

    I vote for a bake sale. Take all that weed confiscated in states where it is still illegal, put it up for sale in states where it’s legal, slap on a heavy-duty tax — at leaste as much as on tobacco — and bring in the cash. The potheads will be dizzy and happy and the money can go into funds where it’s most needed, like Medicare and Social Security.

  9. DaveO says:

    BLUF: Every single number given in this argument is a false one. There are too many accounting tricks baked into the numbers to know exactly where we stand.

    We could as likely be sitting on a USD 2 trillion surplus.

    • Hondo says:

      And how, precisely, can comparing revenue and spending from the same periods in consecutive fiscal years possibly be “false”?

      When you can explain that, I’ll listen to your argument, DaveO. Otherwise, you might want to keep quiet to avoid demonstrating yourself a gullible novice.

  10. DaveO says:

    Hondo:

    Since 1974, spending automatically goes up, without regard to receipts, savings, and so on. Every year, or other year becomes a new baseline. So that’s either 38 or 19 new baselines.

    As Geithner has said, not spending money on Iraq and Afghanistan is a savings, even though the cash is being spent elsewhere. So is that money savings, spending, or deficit spending? Can it be all three?

    For example: some who short-sells a house for $200,000 under value, for a total loss after renovation of $300,000. According to accounting rules, the seller has earned $200,000 – and has to pay taxes on that, regardless of the how the money actually fell out, because the IRS considers it income, and capital gains too.

    Accounting tricks. We can’t know because Congress and the Government do not use straight accounting like we use in the home.

    This is why CBO, GAO, and the IRS can never give a straight answer – there is no foundation on which to base straight analysis. And, both parties love this because no one can tell the Truth.

  11. NHSparky says:

    Bottom line–nobody in a position of power or those benefiting from the largess of Uncle Barack are willing to admit that there’s going to be a shitstorm of epic proportions when both the feds and states can’t support even a fraction of the people that are on the gravy train now.

    I’m looking at paying MORE into SS than I’ll get back, even if they don’t scale back benefits which is a virtual certainty at this point.

    We’ve been kicking the can down the road for almost 40 years. Eventually you can’t kick it any more.

  12. Roger in Republic says:

    Sorry fellows, but the platinum coin idea is a non-starter. One trillion dollars worth of platinum @ $1210/oz would weigh 38,819,875 pounds. Rather tough to move or store. Keep in mind that the worlds production of platinum in 2010 was only 422,400 lbs. I doubt that the entire world supply is equal to 38 million pounds. And to make 2 coins would require double that amount, 77,639,750 lbs.
    As I was running these numbers it came to me how incredibly large a trillion of anything is. If someone gave you a thousand dollars a day from the birth of Christ to the present you would still not have a Billion dollars yet, which is 1000 time smaller than a trillion. We are so screwed.

  13. teddy996 says:

    @13- no, Roger, they’ll carve some fancy Obama heads on them, and the value of the craftmenship will put them to $1t apiece.

    Not only that, but… where would they get the money to BUY the platinum to make them? Or would they steal it at gunpoint?

  14. DefendUSA says:

    @13…the article says that it could be TWO coins and the law states they can assign ANY value. Your numbers may be correct, but the interpretation of the code says they can do this.

  15. CAs6 says:

    @13 yeah, that’s the point. Minting those coins and assigning them arbitrary inflated values is a ridiculous idea no matter how you slice it.

    I really hope I don’t have to explain to my kids in a few years that the country fell apart because the government made two coins that were supposed to solve all our problems. I don’t think they would believe anything I said after that, it’s just too absurd.

  16. Eric says:

    @18: “We should do everything we can to encourage companies like Daimler to keep investing in American workers,”

    What he really meant was “investing in American unions that kiss my ass thoroughly and gave my campaign funding so I could get elected/re-elected.”

    Since this came out, the jobs report came out claiming unemployment is down to 7.7%. Only 176,000 new jobs were created.

    My thoughts on that would be, many people are probably getting holiday jobs, which is causing them to not ask for unemployment while they do, but in January this number will go back up because seasonal jobs are over. But I could be wrong.

    DaveO: while the “real” number can be in dispute, you can’t tell me that its not “bad” and we aren’t in a “hole.” If we had a 2 trillion dollar surplus, Obama and Reid would be claiming every 5 seconds “see, we made this happen!” even if it was there before they were elected.

  17. Ex-PH2 says:

    @19 — the unemployment numbers are also down because many people who were getting benefits can no longer get them, because their time limit has expired.

  18. DaveO says:

    #19: I engaged in hyperbole to make the point that we don’t have a point of reference. I mentioned in a later post that there are many accounting techniques that are part of the system.

    If we start with simple receipts, as reported by the IRS, that could be a point of reference. Going with straight math – subtract actual expenditures (not obligations, which are promises to pay), and then we can determine where we are.

    The question is cui bono – who benefits from the bad accounting and fuzzy numbers?

  19. Hondo says:

    DaveO: one doesn’t need a point of reference to do some forms of simple trend analysis. Comparison of income vice outlay for equivalent periods is one such simple trend analysis.

    It doesn’t tell you much. But it does tell you whether things are getting relatively better or relatively worse over time with respect to the “bottom line”.

  20. Ex-PH2 says:

    There was a press conference yesterday with Ben Bernanke in regard to interest rates, which he said will remain low until unemployment reaches 6.5%.

    Now as we all know, saying something like that out loud, where the —–s can hear it, can result in numbers that have been bent to — well, meet expectations.

    Anything is possible in wonderland.

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