Still, through eight months of the 2011 fiscal year the nation is facing its third straight $1 trillion-plus deficit -- totaling $927.4 billion so far compared with $935.6 billion during the same period in 2010, about $8 billion less, according to the report.
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The nation started out 10 years ago, when President George W. Bush took office, with a surplus of $127 billion in 2001. Projections at the time showed the federal budget was expected to run $5.6 trillion in surpluses through the decade.
Instead, the country began battling growing deficits, hitting a record $454.8 billion in 2008, following the approval of tax cuts, a new Medicare drug benefit program and funding for the ongoing wars in Iraq and Afghanistan.
The Bush administration then passed the $700 billion TARP during a financial crisis in the fall of 2008 while the Obama administration tacked on a $787 billion economic stimulus package in February 2009 as a way to accelerate the nation's economic recovery.
In December, Congress and the White House agreed to an $858 billion comprehensive package for a two-year extension of the 2001 and 2003 Bush-ear tax cuts for all income levels, as well as an extension of federal unemployment benefits through the end of 2011, which could push the fiscal 2011 budget deficit to $1.4 trillion, about the same as the record level in 2009, up from last year's $1.3 trillion.
Historical Amount of Revenue by Source - taxpolicycenter.org
This is a simple chart which indicates that tax receipts have been relatively stable over the last decade. Our financial troubles are entirely due to excessive spending.
Fanniegate: Gamechanger For The GOP? - Walter Russell Mead
The Tea Party WMD stockpile is currently stored in book form: Reckless Endangerment: How Outsized Ambition, Greed, and Corruption Led to Economic Armageddon. By Gretchen Morgenson, one of America’s best business journalists who is currently at The New York Times, and noted financial analyst Joshua Rosner, Reckless Endangerment gives the best available account of how the growing chaos in the mortgage and personal finance markets and the rampant bundling of dubious loans into exotically toxic securities plunged the world, and millions of American families, into the gravest financial crisis since World War Two.
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Fannie Mae, a historically staid and predictable government linked company, needed to turn into a cutting edge speculative growth engine to make the hundreds of millions Johnson wanted. Since taxpayers stand behind Fannie Mae’s debts, Johnson needed to get the politicians to back his desire to turn this milkwagon into a Porsche. Fortunately for him — and unfortunately for the country and the world — he found a way.
Fannie Mae would adopt the goal of increasing the percentage of Americans who owned their own homes, targeting the inner city poor who, allegedly, were blocked from home ownership by racial discrimination. (A bogus study to this effect was widely circulated; devastating criticisms and rebuttals quietly ignored.) This is where such luminaries of the American political scene as ACORN and La Raza get into the act. They served as cheerleaders for Johnson’s self-enrichment plan, camouflaging a Wall Street rip-off by hymning its benefits for the poor.
The purpose of no doc, no money down loans wasn’t, Heaven forbid, to generate rich fees and high interest rates for mortgage brokers and Wall Street. No, the smarmy defenders of the Great American Rip-off told us, those features were necessary to make sure that poor people (so cruelly, unfairly locked out of mortgages because they didn’t qualify for the stuffy old-fashioned kind) could participate in the American Dream. Anybody who opposed Jim Johnson’s get rich scheme was a racist who hated the poor. Political correctness married Wall Street chicanery as Maxine Waters, Chris Dodd and Barney Frank led the band; crooked accountants and clueless rating agencies performed the ceremony; big government dowered the couple with a debt guarantee and bankers dressed as flower girls showered the happy pair in a confetti of junk mortgages and junk bonds.
Fannie Mae and the housing market were off to the races — and where Fannie Mae led the way, the financial markets followed. Regulators were captured by the interests they were supposed to regulate; favors were dispensed with a lavish hand; taxpayer-provided money was used to assemble a vast lobby focused on extracting more money from hapless taxpayers to make James Johnson even richer. In the process, millions of financially unsophisticated low income people were stuck with obscenely unfair mortgages, honest whistle blowers were subjected to savage personal attacks, home prices lost all touch with reality, taxpayers were stuck with losses that may approach one trillion dollars, and financial markets were poisoned almost beyond repair.
When Government Jumps the Shark - Walter Russell Mead
Read the whole thing. Described are the four stages of the government program life cycle: Great White Hope, Great White Father, Great White Elephant, Great White Shark.
The fourth stage of life comes when the Great White Elephant morphs into a Great White Shark: a man-eating terror of the deep that ruthlessly attacks anyone who gets in its way. At this stage the government program has moved beyond being wasteful and has become unsustainable. Fannie Mae goes from providing mortgages to creditworthy households to providing vast numbers of mortgages to uncreditworthy households, poisoning the financial system with bad loans. Medicare is unsustainable in the medium term and hugely expensive day to day — even as the procedures and regulations of Medicare warp investment decisions across the entire health care system.
But even as these programs become unsustainable, they have become so powerful — there are so many interests and industries that grow rich on these programs, and so many families for whom these programs have become the cornerstone of what little financial security they have — that they cannot be touched. One way to tell when an elephant has morphed into a shark: when pundits and politicians start describing a government program as a ‘third rail’: you touch it, you die.
The Great White Shark is a menace that cannot be controlled. The program has gone rogue: the Army Corps of Engineers isn’t just building pointless dams. It is building bad dams. The agricultural subsidies aren’t just encouraging farmers to plant wasteful crops; by subsidizing corn ethanol they are contributing to food price inflation that threatens political stability in countries like Egypt. But just as the programs are most in need of reform, reform becomes impossible. If you try to stop Fannie Mae from tempting poor urbanites into ruinous mortgages that will leave them worse off than before while bringing the global economy to the edge of ruin, the race lobby (aided and abetted by the real estate lobby) will attack you as a racist and an enemy of the American Dream.
The problem today is that we are looking not just at one or two government programs that have succumbed to elephantiasis or turned into sharks; the progressive complex of social and economic policy as a whole has reached this point. Today many of our New Deal and Great Society programs are either elephants or sharks. They either lead us to misallocate scarce resources in ineffective ways or they threaten us with ruin by becoming politically untouchable budget busters.
Democrats' Tax-And-Spend Insanity - IBD Editorial
Indeed, few ideas have been so thoroughly discredited as the one that says more government spending will increase jobs. As the chart above shows, government outlays climbed more than 40% between 2006 and 2011. At the same time, the employment figure has dropped by almost 5 million.
The Cato Institute's Mark Calabria, who pulled the data together for the chart, is quick to point out that just because there's a correlation between rising government spending and falling jobs doesn't mean there's a causal relationship.
However, he says, it does "suggest to me that continued massive government spending is not going to turn around the job market."
Calabria is being overly cautious.
In our view, the chart doesn't just suggest anything. It practically screams that government spending won't create jobs. If it did, there's no way we'd see so many unemployed today after wildly increasing federal outlays.
