First time in years we have an April DEFICIT, but that is just part of the story…
WASHINGTON (MarketWatch) – With the recession undermining income-tax receipts, the U.S. government recorded a $20.9 billion deficit last month, the first April deficit in 26 years, the Treasury Department reported Tuesday. Through the first seven months of the fiscal year, the federal deficit has mounted up to a record $802.3 billion, compared with $153.5 billion at the same time last year. Income-tax receipts are down nearly 31% for the fiscal year so far. Total receipts are down 19% to $1.26 trillion. Spending for the first seven months rose 20% to $2.06 trillion.
Is America about to go broke? Scott Burns (Read CWFlink’s comment (first one) on this article.)
My view: Governments since Reagan have been "borrowing" from the so-called Social Security "Lock Box" to cover deficits. In this era of $1.8 TRILLION deficits (this year only), this is impossible to continue. So besides the weight of the war, increased spending, increased competition, higher energy costs, trade collapse and excessive political correctness (all while claiming "pragmatism"), the government must now recognize that the "lock box" is not just empty, but full of IOUs that will have to be PAID!
In short, the chickens are coming home to roost. For years, we’ve been warned that the day would come when the "slush fund" would go broke. But over and over again we were told: "…will will continue to run a surplus for years! We’ll fix the problem before then." Well, "then" has arrived!
I don’t see any way out of long term misery UNLESS we unleash the creative energy of the American People. We CANNOT do that and wait for WASHINGTON to "solve the problem"! Washington CREATED the problem. Drill everywhere, build micro-nuclear power plants, cover every roof with solar panels, grow corn in the state parks for ethanol, etc. and make energy SO CHEAP we become the new Saudi Arabia, exporting energy (and innovation and capital) to the world.
The first step toward this is to allow EVERYONE to keep enough of what they earn that the WANT to go out and CREATE new businesses! This means freezing government employment and instead encourage EVERYONE to go out and do what needs to be done: CHARITIES and CHURCHES feeding the poor, healing the sick, hauling the unemployed to the fields to work for food, and everyone with money (or a paycheck) to invest in new business opportunities…. WITHOUT FEAR OF GOVERNMENT UNDERCUTTING THEIR EFFORTS!
We don’t know what will work in energy, environment or commerce. We need to allow the people experiment and find out what works, even if it is not "politically correct" to even breath without paying a Carbon tax!
Even if all this happens, the next few decades will be a "close thing" for mankind. We are exporting a great deal of poverty by destroying vast amounts of wealth and then borrowing what money remains to fund our own Governments endeavors, as if we knew what we’re doing. Meanwhile, those funds borrowed from overseas are not being used to educate, heal and industrialize the very nations from whom those resources (financial, intellectual, and natural) have been imported.
We have a lot of "credit", worldwide, for having saved this world after World War II. It was relatively easy, because we were the last industrial nation standing. Our geography (Atlantic and Pacific oceans) saved us, and we were generous enough to share and not exploit our blessings. If we keep borrowing and wasting and exporting recession, we will soon destroy all that goodwill. At that point, we will either be attacked, or possibly worse, bypassed, as the rest of the world finds how to take care of themselves.
So why did the markets go up today? We will see some pop ups in the markets, partially bolstered by hope the stimulus will work and partially by recognition of the coming inflation. When the dollar is no longer the darling of the overseas investor, i.e. when it begins to reflect our wasteful spending, the value of the dollar will crash and anything enumerated in dollars will suddenly become more expensive, making the markets go up simply because the real values of property and facilities will sky-rocket in terms of the "worthless" dollar. But even those with "property" will not be prosperous, because they will have few buyers and lots of taxes.
This is still a couple of years away. But if we don’t recognize THIS threat to our future, the way we didn’t recognize "terrorism" and a whole string of financial bubbles over the past two decades, the economy will sink into a 1930’s style depression, possibly to be ended (again) only by another World War.
I don’t know what more to say. It is now up to the young people of this country to get educated, become wise to politics, rediscover our work ethic and independence, and shape a NEW America Era.