How bad do you think our economy will get!

[Bubba]

It's on its way ... Gov't control is expanding and promises by Obama are being quickly forgotten. Bush's budget deficit's will be child's play come the Obama years.

Obama Calls for Budget Reform as Deficits May Last for Years

By HENRY J. PULIZZI

WASHINGTON -- President-elect Barack Obama warned Tuesday that the federal deficit is likely to rise to close to $1 trillion this year, saying the exploding budget gap underscores the need for long-term reform of the nation's finances.

Following a meeting with his economic and budget team, Mr. Obama told reporters that the plan being crafted to jump start the economy will ban earmarks, the pork-barrel projects lawmakers insert into legislation without review. He repeated that the stimulus package will be evaluated by an oversight board, and said taxpayers will have access to information on how their money is spent.

"We're already looking at a $1 trillion budget deficit or close to a $1 trillion budget deficit, and potentially we've got $1 trillion deficits for years to come," Mr. Obama said.

"We're going to have to stop talking about budget reform and we're going to have to fully embrace it. It's an absolute necessity."

The president-elect's remarks Tuesday were the latest in his drive to sell lawmakers and the public on a stimulus plan that could approach $775 billion over two years, legislation that will further pressure the already record-high deficit.

Mr. Obama met at his transition office with Rahm Emanuel, Chief of Staff-designate; Timothy Geithner, Treasury Secretary-designate; Peter Orszag, Director-designate, Office of Management and Budget; Rob Nabors, Deputy Director-designate, Office of Management and Budget; Christina Romer, Director-designate, Council of Economic Advisors; and Lawrence Summers, Director-designate, National Economic Council.

The session was aimed at reviewing the medium-term budget outlook and discussing a fiscal 2010 budget that puts the government on a path to reduce the record deficit.

The government ran a record budget deficit of $454.8 billion for fiscal 2008, which ended in September.

"We're going to have to bring significant reform not just to our recovery and reinvestment plan, but to the overall budget process, to address both the deficit of dollars and the deficit of trust," Mr. Obama said. "We'll have to make tough choices, and we're going to have to break old habits."

Did you read the article? The plan will ban earmarks and Obama is calling for reform of the budget process and talking about having to make choices as we go forward.

[XtremeJibber2001]

Did you read the article? The plan will ban earmarks and Obama is calling for reform of the budget process and talking about having to make choices as we go forward.

Oops. You're right. Coming from the same guy that said there would be no new spending without cuts to account for such spending? Yea .....

[Bubba]

Did you read the article? The plan will ban earmarks and Obama is calling for reform of the budget process and talking about having to make choices as we go forward.

Oops. You're right. Coming from the same guy that said there would be no new spending without cuts to account for such spending? Yea .....

Let's see....circumstances change, i.e. financial crisis and economic slowdown, yet you want no change in his proposed policy approach from what he said BEFORE the financial crisis and economic slowdown. Let me quote a great American, winner of the Medal of Honor, Gunnery Sergeant Thomas Highway: Improvise, Adapt, Overcome!

[rogman]

Lot of money on the sidelines right now. As soon as conditions stabilize it will start trickling back into the market. Cheap gas is already giving the economy a boost. Gold and Silver are a suckers bet right now. DOW is already back over 9K (but I've no doubt it will continue to whip saw), expect it will be back over 10 within a few months. Obviously there are issues with specific sectors of the economy, but much of it is sound. Lot of "chicken little" stuff going on, but there are real values out there. Smart money is starting to take advantage.

[TLonginotti4KTon]

I own gold and I own silver....I also own pounds of rice.

I hope you all have the last laugh........GOOD LUCK.

If I am wrong, I risked nothing, and gained everything.
If I am wright, I risked everything, and gained........(to be determined)

[XtremeJibber2001]

Did you read the article? The plan will ban earmarks and Obama is calling for reform of the budget process and talking about having to make choices as we go forward.

Oops. You're right. Coming from the same guy that said there would be no new spending without cuts to account for such spending? Yea .....

Let's see....circumstances change, i.e. financial crisis and economic slowdown, yet you want no change in his proposed policy approach from what he said BEFORE the financial crisis and economic slowdown. Let me quote a great American, winner of the Medal of Honor, Gunnery Sergeant Thomas Highway: Improvise, Adapt, Overcome!

That's an extreme change in policy. Obama has gone from no new spending to a policy of budget deficits that will double anything GWB did and for years to come (have you heard how he'll pay for it? Ending the Iraq war doesn't cover this ... where's Coydog LOL). Although you haven't admitted you support this policy, it certainly seems you're in agreement with all this money being spent (surprising for someone who voted for McCain)? Where do you draw the line on the spending? At which point should the Gov't step to the side and allow the market to adjust?

I'm not sure if you have kids or grandkids, but someone is going to have to pay for all this. We could very well have the Gov't spending trillions of taxpayers dollars to artificially prop up the market, but at some point it will break ... then what? Throw more money at the problem? We saw how the $700B GWB authorized to be spent was handled ... it was used in a manner that was not in line with what Paulson (sure, circumstances changed in that one week from what Paulson was saying to what he actually did, right?) had planned and the other half of that money will most likely be frozen (if it hasn't been already).

I guess after seeing 30% of my colleagues let go, friends taking pay cuts, friends/family forgoing raises/promotions/bonuses, friends being laid off, etc ... if we're going down this road to Socialism ... where is my generations cut of the pie?

[Bubba]

Did you read the article? The plan will ban earmarks and Obama is calling for reform of the budget process and talking about having to make choices as we go forward.

Oops. You're right. Coming from the same guy that said there would be no new spending without cuts to account for such spending? Yea .....

Let's see....circumstances change, i.e. financial crisis and economic slowdown, yet you want no change in his proposed policy approach from what he said BEFORE the financial crisis and economic slowdown. Let me quote a great American, winner of the Medal of Honor, Gunnery Sergeant Thomas Highway: Improvise, Adapt, Overcome!

That's an extreme change in policy. Obama has gone from no new spending to a policy of budget deficits that will double anything GWB did and for years to come (have you heard how he'll pay for it? Ending the Iraq war doesn't cover this ... where's Coydog LOL). Although you haven't admitted you support this policy, it certainly seems you're in agreement with all this money being spent (surprising for someone who voted for McCain)? Where do you draw the line on the spending? At which point should the Gov't step to the side and allow the market to adjust?

I'm not sure if you have kids or grandkids, but someone is going to have to pay for all this. We could very well have the Gov't spending trillions of taxpayers dollars to artificially prop up the market, but at some point it will break ... then what? Throw more money at the problem? We saw how the $700B GWB authorized to be spent was handled ... it was used in a manner that was not in line with what Paulson (sure, circumstances changed in that one week from what Paulson was saying to what he actually did, right?) had planned and the other half of that money will most likely be frozen (if it hasn't been already).

I guess after seeing 30% of my colleagues let go, friends taking pay cuts, friends/family forgoing raises/promotions/bonuses, friends being laid off, etc ... if we're going down this road to Socialism ... where is my generations cut of the pie?

Well, so far, much of the money that was "spent" was used to purchase non-voting stock of banks and others in a temporary move to recapitalize financial institutions and free up lending. When that stock is sold in 3 - 5 years, the government should get its money back and possibly earn a profit.

The Fed is now buying up some of the so-called "toxic" securities that have questionable mortgages packaged within. Given that 90% or more of mortgages are performing just fine, the problem with the securities is really that nobody knows their "true" value in a mark-to-market world so one would think that the Fed will recoup its money later on through either taking the revenue from the performing mortgages or selling the debt at a later date back into the market once things calm down.

The Fed has lowered interest rates about as far as they can. Managing interest rates is standard monetary policy and is being coordinated with other central banks so that currency relationships don't get too far out of whack. This is a global problem, a global slowdown, and it appears that the world's industrial economies have learned a lot since 1930. As we begin to recover, the Fed can begin to raise interest rates again to reduce the money supply back to more normal levels.

So..where's the "real" debt we're taking on for the long haul? Well, we haven't really taken on as much real debt as you think yet given that we expect to be repaid for much of what's been done so far. The real debt will come with a fiscal stimulus package that comes out of Congress.

What we've taken on as a country right now is risk - the risk that the banks we've stabilized won't remain stable and we'll have to keep propping them up; or the risk that the non-voting stock we've purchased will turn out worthless; or the risk that the mortgage securities we've purchased turn out to have real value that's less than what the Fed is paying for them.

[XtremeJibber2001]

Well, so far, much of the money that was "spent" was used to purchase non-voting stock of banks and others in a temporary move to recapitalize financial institutions and free up lending. When that stock is sold in 3 - 5 years, the government should get its money back and possibly earn a profit.

IMHO. The role of the Gov't should not be to use tax payer dollars to invest in companies in hopes of making a profit and MAYBE passing that profit to the taxpayers.

The Fed is now buying up some of the so-called "toxic" securities that have questionable mortgages packaged within. Given that 90% or more of mortgages are performing just fine, the problem with the securities is really that nobody knows their "true" value in a mark-to-market world so one would think that the Fed will recoup its money later on through either taking the revenue from the performing mortgages or selling the debt at a later date back into the market once things calm down.

Again, this should not be the role of our Gov't. We have discussed the "mark-to-market" accounting standard/policy in the past so I won't go into it again, haha.

The Fed has lowered interest rates about as far as they can. Managing interest rates is standard monetary policy and is being coordinated with other central banks so that currency relationships don't get too far out of whack. This is a global problem, a global slowdown, and it appears that the world's industrial economies have learned a lot since 1930. As we begin to recover, the Fed can begin to raise interest rates again to reduce the money supply back to more normal levels.

I have no issues with this approach.

So..where's the "real" debt we're taking on for the long haul? Well, we haven't really taken on as much real debt as you think yet given that we expect to be repaid for much of what's been done so far. The real debt will come with a fiscal stimulus package that comes out of Congress.

There should be some changes to the above. We don't expect to be repaid, we're taking a risk in which we hope to repaid and hope the money will be return to Joe Taxpayer.

What we've taken on as a country right now is risk - the risk that the banks we've stabilized won't remain stable and we'll have to keep propping them up; or the risk that the non-voting stock we've purchased will turn out worthless; or the risk that the mortgage securities we've purchased turn out to have real value that's less than what the Fed is paying for them.

Exactly.

[thorski]

The economy is going to get worse.
All owners and managers of companies i deal with are talking about more layoffs coming. Most of these companies have already had layoffs last summer. A phrase that keeps coming up is "We will probably be running a skeleton crew by the end of the winter."
Several companies (The smaller ones) are talking about shutting down, and several already have. 1 heating air conditioning company, one carpenter who employed 4 guys, A small manufacturing company that employed 13 people, and One welder closed up shop and got a job at sikorsky-He employed two guys.
One major lumber yard in my area has already shut down and the other lumber yards are in the cleanest condition i've ever seen. This meaning the workers aren't working- they are cleaning. Like i said more layoffs are coming.
Alot of fear out there. Another scary thing is almost every manager and owner i've talked to also brought up the fact that they don't think obama will survive his first term.

[thorski]

None of it matters, the Myan calendar says it will all over december 21, 2012.

[Coydog]

"We're going to have to bring significant reform not just to our recovery and reinvestment plan, but to the overall budget process, to address both the deficit of dollars and the deficit of trust," Mr. Obama said. "We'll have to make tough choices, and we're going to have to break old habits."

That's an extreme change in policy. Obama has gone from no new spending to a policy of budget deficits that will double anything GWB did and for years to come (have you heard how he'll pay for it?

It appears Obama intends to operate based on principle and adapt based on circumstances. This is a refreshing change from the previous administration that operated based on circumstance and refused to adapt based on principle.

XJ, I’m not sure what your point is. You seem unhappy that people are being laid off, but equally unhappy that Obama proposes government spending to keep people employed. What alternatives would you propose? If the market was left to adjust completely on its own, we would most likely experience bigger and more frequent swings between recessions and expansions.

Deficit spending is probably the most effective tool a government has to counter a deep recession. The government buys stuff, businesses produce, consumers spend and workers get hired. As long as the deficit spending is done timely and responsibly, the effects should be positive. Obama’s campaign platform always included investment in infrastructure and health care, two places where prudent government spending can mitigate a recession.

So how does a government pay for the recovery? Decrease spending after the recovery plus increased tax revenues from the resulting economic expansion.

[XtremeJibber2001]

It appears Obama intends to operate based on principle and adapt based on circumstances. This is a refreshing change from the previous administration that operated based on circumstance and refused to adapt based on principle.

Much different then Obama's "No new spending" isn't it? I suppose tripling the deficit is refreshing to some.

XJ, I’m not sure what your point is. You seem unhappy that people are being laid off, but equally unhappy that Obama proposes government spending to keep people employed. What alternatives would you propose? If the market was left to adjust completely on its own, we would most likely experience bigger and more frequent swings between recessions and expansions.

Why are the Auto Makers getting a bail out? Why not my company? Why not Anne Taylor? KPMG? Why didn't Lehman? Why are execs getting huge bonuses that have been given money guaranteed by the Fed and funded by taxpayers? I mean hell the Gov't is buying shares in companies in hopes of returning a profit so it can give the money back to us minions. You don't see any problems with this logic? I'm willing to put all my money on Red and say that after $1.2 Trillion of our money is spent (wasted) that my friends both at my company and others will continue to be laid off. Why not stop the reckless and unorganized spending and allow the market to adjust on it's own? I'd be a lot less bitter if the market alone was driving these changes rather then the changes keep occuring and we're throwing money at the problem like a drunken college student with a VISA.

You say that had the market let be to its own devices it would have "most likely" expereinced bigger and more frequent swings, but I can say with equal uncertainty that this $1.2 Trillion Obama wants could end up doing little for the economy ... similar to how the money for AIG, Ford, GM, etc. will most likely do nothing but prolong the time of their deaths.

You and others have complained repeatedly about how we rush into the Iraq war, we didn't spend enough time vetting the data, we didn't have the money for the war, etc. In less then a year we've started to hand out tax payer dollars to "select" companies. To make matters worse we have a soon to be President who campaigned on "No new spending" and in mere months is talking about tripling the deficit and people are calling it a "refreshing policy" change. You don't think we're rushing? $1.2 Trillion is a lot of money and doesn't include the money the auto makers, AIG, and the companies on Wall Street have already received.

Deficit spending is probably the most effective tool a government has to counter a deep recession. The government buys stuff, businesses produce, consumers spend and workers get hired. As long as the deficit spending is done timely and responsibly, the effects should be positive. Obama’s campaign platform always included investment in infrastructure and health care, two places where prudent government spending can mitigate a recession.

Obama and Paulson are both guilty of saying one thing and doing something completely opposite. We've had tough economic times in the past ... if my memory serves me correctly ... the 80's weren't ideal. How much money was spent to artificially prop up the market back then? Obama's campaign also always included ending the Iraq war at an annual cost of $500B to help fund his pet projects. Ironic how this campaign promise (and others) have gone eerily silent, isn't it?

So how does a government pay for the recovery? Decrease spending after the recovery plus increased tax revenues from the resulting economic expansion.

Why does the Gov't have to help businesses recover? Over the long term can all of these companies support themselves? Is the market flooded with companies that shouldn't be there? We're throwing money at auto companies who haven't made cars Americans want in years ... how does this make sense? The market needs to adjust and the Gov't messing with it's inner workings will only make the eventual market adjustment much, much worse.

[Coydog]

Ok, so you have absolutely no suggestions other than "let the market take care of it". If that’s your only solution, then stop whining about all those layoffs – it's just the market adjusting.

[XtremeJibber2001]

Ok, so you have absolutely no suggestions other than "let the market take care of it". If that’s your only solution, then stop whining about all those layoffs – it's just the market adjusting.

I have two suggestions:

- If we're blowing taxpayers dollars ... spend the money on everyone, not just "select" companies or "select" industries.

- Forgo blowing taxpayer dollars and allow the market to correct on it's on.

Personally, I'm doing fine. Just got a raise, promotion, and bonus. The people that voted for Obama and think he will save the World and their jobs by blowing our deficit out of the water are driving me nuts.

Interesting to note you ignored all the other valid points I made. Can't wait to see all the "I didn't vote for him" stickers.

[Bubba]

Interesting to note you ignored all the other valid points I made. Can't wait to see all the "I didn't vote for him" stickers.

Maybe it's because he didn't think your points were valid?