Thursday, May 13, 2010

Have We Gone Over The Cliff?

Everyone knows the US is in terrible fiscal shape.  We're broke.  We're bleeding red ink at what virtually all economists agree is an unsustainable rate.

But what if that unsustainable rate is even higher than we've been told?  What if instead of a total bar tab of $1.5 trillion for 2010, the total is going to be $2 trillion or maybe even $3 trillion?

Yesterday's data from the Treasury Department couldn't be more grim.  For the month of April, the feds ran a deficit of $82.69 billion.  Compare that to the 'modest' $20.91 billion deficit a year earlier in 2009 -- when things were supposedly worse than they are now during 'recovery'.  How can we have 4 times the deficit during a recovery month than we did during the deepest part of the recession?

Consider that April is a special month.  Money is supposed to pour in during April because personal income taxes are due.  But this April the government took in $20 billion less in income taxes than last April.  Why?  Because so many people are unemployed and many of those still employed are earning less.  Even the government can't tax money we don't make.

Consider too that April is supposed to be a surplus month.  In 43 of the last 56 years, the government took in more money in April than it spent.  This year, the government had the highest April deficit ever.  Ever.

If April is this bad, what will the rest of the year look like?  A $1.5 trillion deficit for 2010?  Don't you believe it, gentle reader.  Even Obama's own budget director, Peter Orszag, said "the United States must tackle its deficits quickly to avoid the kind of debt crisis that hit Greece."

Ya think?

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