The Collapse of the U.S. Economy and Government Finances
Obama’s Budget: Almost $1 Trillion in New Taxes
February 26, 2009ABC News - President Obama’s budget proposes $989 billion in new taxes over the course of the next 10 years, starting fiscal year 2011, most of which are tax increases on individuals.
1) On people making more than $250,000: Total: $636 billion/10 years
2) On businesses: Total: $353 billion/10 years
Barack Obama Unveils Staggering $3.55 Trillion Dollar Budget
February 27, 2009President Barack Obama has unveiled a staggering $3.55 trillion (£2.44 trillion) budget, costing each American taxpayer the equivalent of $25, 573...
Obama Seeks $634 Billion Over 10 Years for Health Care
February 25, 2009AP- President Barack Obama's first budget will seek $634 billion over 10 years as a down payment on health care reform, a senior administration official said Wednesday. The official said Obama's proposal is meant to start a dialogue with Congress over how to provide coverage for an estimated 48 million uninsured while also slowing health care costs, which amount to $2.4 trillion a year and keep rising even as the economy is shrinking.
Obama's request comes on top of recent health care expansions approved by Congress and also described by his administration as down payments toward overhauling the health care system. Those include $32 billion to expand coverage for the children of low-income workers and $19 billion to speed the adoption of computerized health records.
Aside from health care, the budget will extend Obama's signature $400 tax cut for workers, originally enacted as part of the economic stimulus plan. The budget also calls for an increase in the top income tax rate, from 35 percent to 39.6 percent for couples with incomes above $250,000 a year, said another administration official.
The biggest tax adjustment, however, would come from updating the alternative minimum tax for inflation. That would add $150 billion to the deficit by 2013. The AMT was originally designed to make sure the wealthy paid at least some taxes, but it threatens to ensnare some 24 million middle- to upper-income taxpayers next year...
House OKs $410 Billion Bill to Boost Domestic Programs
February 25, 2009AP - The Democratic-controlled House approved $410 billion legislation Wednesday that boosted domestic programs, bristled with earmarks and chipped away at policies left behind by the Bush administration. The vote was 245-178, largely along party lines.
Republicans assailed the measure as too costly — particularly on the heels of a $787 billion stimulus bill that President Barack Obama signed last week. But Democrats jabbed back.
"The same people who drove the economy into the ditch are now complaining about the size of the tow truck," said Rep. James McGovern, D-Mass., pointing out the large increase in deficits that President George W. Bush and GOP-controlled Congresses amassed...
Economic Crisis ‘Is As Bad As They Come’
February 23, 2009San Francisco Chronicle - Americans can expect unemployment to reach 11 or 12 percent, housing prices nationally to drop 36 percent, stocks to lose more than half their value, and real output per capita to plunge 9.3 percent, according to economists Carmen Reinhart of the University of Maryland and Kenneth Rogoff of Harvard University, who have tracked financial crises back to 14th century England...
Get Ready for Mass Retail Closings
February 23, 2009Yahoo Finance - About 220,000 stores may close this year in America, says our guest, retail consultant Howard Davidowitz of Davidowitz & Associates. As more Americans save and spend less, it’s clear there’s too much retail space. Just visit Web site deadmalls.com and track retail’s growing body count. And luxury retailers? They’re on "life support," Davidowitz says.
Among the brandname stores Davidowitz says are in trouble:
• Nordstrom
• Neiman Marcus
• Tiffany
• Jeweler Zale Corp.
• Saks
• J.C. Penney
• Sears
Kansas Suspends Income Tax Refunds, May Miss Payroll
February 16, 2009AP Mobile News Network - Kansas has suspended income tax refunds and may not be able to pay employees on time, the state’s budget director said Monday.
The state doesn’t have enough money in its main budget account to pay its bills, prompting Democratic Gov. Kathleen Sebelius to suggest transferring $225 million from other accounts throughout state government. But the move required approval from legislative leaders, and Republican leaders refused Monday.
Budget Director Duane Goossen said that without the money, he’s not sure the state can meet its payroll. State employees are scheduled to be paid again Friday...
$65 Trillion - U.S. Financial Obligations Exceed The Entire World's GDP
February 17, 2009The Final Hour - The total liabilities of the United States government, including future social security and medicare payments that the U.S. government is already committed to pay out, now exceed 65 TRILLION dollars, which is more than the entire GDP of the whole world.
According to the 2008 Financial Report of the United States Government, which is an official United States government report, the U.S. actually had a budget deficit of 5.1 trillion dollars in 2008.
So why did the Congressional Budget Office report that the federal budget deficit was only 455 billion dollars (which is certainly a total disaster) in 2008?
The difference lies in accounting. The CBO’s figures are based on cash accounting, while the 2008 Financial Report of the United States Government is based on GAAP accounting. GAAP accounting is what is used by all the major firms on Wall Street and it is regarded as a much more accurate reflection of financial reality...
How Banks Are Worsening the Foreclosure Crisis
February 13, 2009AP - The bad mortgages that got the current financial crisis started have produced a terrifying wave of home foreclosures. Unless the foreclosure surge eases, even the most extravagant federal stimulus spending won’t spur an economic recovery.
The Obama Administration is expected within the next few weeks to announce an initiative of $50 billion or more to help strapped homeowners. But with 1 million residences having fallen into foreclosure since 2006, and an additional 5.9 million expected over the next four years, the Obama plan — whatever its details — can’t possibly do the job by itself. Lenders and investors will have to acknowledge huge losses and figure out how to keep recession-wracked borrowers making at least some monthly payments...
Obama to Outline Plan to Stem Home Foreclosures
February 13, 2009AP - The White House said President Barack Obama on Wednesday will outline his much-anticipated plan to spend at least $50 billion to prevent foreclosures in a speech in Arizona, one of the states hardest hit by the foreclosure crisis.
"It's not intended to be measured by one day's market scorekeeping, but instead to ensure that the 10,000 Americans each day that have their homes foreclosed on, and the millions more that are barely getting by, are protected," White House press secretary Robert Gibbs said Friday without providing other details.
Treasury Secretary Timothy Geithner announced a revised effort to stabilize the financial system on Tuesday. It contained outlines of a foreclosure-relief effort, but few details.
Though lenders have beefed up their efforts to aid borrowers over the past year, their action hasn't kept up with the worst housing recession in decades. More than 2.3 million homeowners faced foreclosure proceedings last year, an 81 percent increase from 2007, and analysts say that number could soar as high as 10 million in the coming years, depending on the severity of the recession...
Revamped Bank Bailout Bill to Help Prevent Foreclosures
February 8, 2009National Economic Council director Larry Summers said... "We need to stabilize and repair our financial system to maintain the flow of credit that families and businesses depend on to keep our economy strong. The plan that Secretary Geithner lays out on Tuesday will achieve that goal."
Summers declined to get into details of the new TARP relief, but said a large chunk of it would go to housing. "The president's made clear that he's very committed to (preventing) foreclosures. I expect that it will be 50 billion dollars or more that will be directed at providing support for the housing sector of our economy," he said.
The top White House adviser said also the refashioned program would assist banks dispose of bad assets while promoting new lines of credit in a climate of greater transparency. Summers said the first half of the TARP spending had "averted what could have been a profound collapse," but said the credit markets were still not functioning and accepted criticism of the spending's opacity...
$3 Trillion — Senate, Fed, Treasury Attack Crisis
February 10, 2009AP - On a single day filled with staggering sums, the Obama administration, Federal Reserve and Senate attacked the deepening economic crisis Tuesday with actions that could throw as much as $3 trillion more in government and private funds into the fight against frozen credit markets and rising joblessness...
600,000 U.S. Layoffs in January
WSWS News - In the 12 months since January 2008, the American economy has hemorrhaged 3.5 million jobs, the most in one year since 1939, during the Great Depression. In a clear indication the economic crisis is rapidly heading into a severe global depression, US employers purged 598,000 jobs in January, the most layoffs in a single month since 1974. January’s firings raised the unemployment rate to 7.6 percent, the highest level since 1992...15 Companies That Might Not Survive 2009
February 9, 2009U.S. News and World Report
Rite Aid (Ticker symbol: RAD; about 100,000 employees; 1-year stock-price decline: 92%)
Claire's Stores (Privately owned; about 18,000 employees)
Chrysler (Privately owned; about 55,000 employees)
Dollar Thrifty Automotive Group (DTG; about 7,000 employees; stock down 95%)
Realogy Corp. (Privately owned; about 13,000 employees)
Station Casinos (Privately owned, about 14,000 employees
Loehmann's Capital Corp. (Privately owned; about 1,500 employees)
Sbarro (Privately owned; about 5,500 employees)
Six Flags (SIX; about 30,000 employees; stock down 84%)
Blockbuster (BBI; about 60,000 employees; stock down 57%)
Krispy Kreme (KKD; about 4,000 employees; stock down 50%)
Landry's Restaurants (LNY; about 17,000 employees; stock down 66%)
Sirius Satellite Radio (SIRI - parent company; about 1,000 employees; stock down 96%)
Trump Entertainment Resorts Holdings (TRMP; about 9,500 employees; stock down 94%)
BearingPoint (BGPT; about 16,000 employees; stock down 21%)
Retired GM Worker Speaks on Freezing Death of 93-year-old Michigan Man
February 5, 2009World Socialist Web Site - Last week a funeral was held for Marvin Schur, the 93-year-old resident of Bay City, Michigan whose frozen body was found in his home on January 17. Schur died of hypothermia after the municipally owned utility company cut off electricity because of a $1,100 unpaid bill.
Bay City home where Schur's body was foundEven though nighttime temperatures had fallen to below zero in mid-January, the city placed a "limiter" on Schur's electric meter—a device designed to shut off power if a resident uses more than 10 amps of electricity. Nothing was done to instruct the old man, who suffered from dementia, on how to reset the device and restore limited service...
Obama to Water Down ‘Buy American’ Plan after EU Trade War Threat
February 4, 2009The Times Online - The European Union warned the US yesterday against plunging the world into depression by adopting a planned “Buy American” policy, intensifying fears of a trade war. The EU threatened to retaliate if the US Congress went ahead with sweeping measures in its $800 billion (£554 billion) stimulus plan to restrict spending to American goods and services.
Gordon Brown was caught in the crossfire as John Bruton, the EU Ambassador to Washington, said that “history has shown us” where the closing of markets leads — a clear reference to the Depression of the 1930s, triggered by US protectionist laws...
“Buy American”—or Bye-Bye America
Personal Bankruptcies Soar 33%
February 2, 2009MSN Money - Personal bankruptcies surged to more than 1 million filings in the United States in 2008 — the most since a rewrite of bankruptcy laws went into effect in 2005...
Folding Dealers Shock Car Buyers with Unpaid Liens
February 1, 2009AP - The national wave of auto dealership closures has come crashing down on thousands of people who are on the hook for used-car loans that dealers were supposed to absolve.
When a car buyer still owes money on a vehicle he is trading in, the dealer promises to pay off the outstanding loan, then resells the vehicle. But as more dealers go out of business, some are sticking consumers with the bill. Lenders can then go after the previous owner who thought the debt was paid, or repossess the car from the new owner who assumed it came with clear title...
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