7 replies to this topic

[.Blizzard]

THE FED 'Calm before the storm' in federal deficit Bernanke urges early, meaningful action to tackle deficit PrintE-mailDisable live quotesRSSDigg itDel.icio.usBy Greg Robb, MarketWatch Last Update: 10:26 AM ET Jan 18, 2007 WASHINGTON (MarketWatch) -- Warning of serious consequences to the U.S. economy if the government's budget mess is not brought under control, Federal Reserve chief Ben Bernanke urged Congress to take "early and meaningful" action to put the budget on a sustainable path. Referring to official forecasts that project the budget deficit to moderate over the next few years, Bernanke said this was simply "the calm before the storm" for the deficit. Spending on entitlement programs will begin to climb quickly over the next decade, he said, likely leading to rising budget deficits and increases in the amount of federal debt outstanding to record levels. Without steps to trim the deficit, a "vicious cycle" may develop in which large deficits lead to rapid growth in debt and interest payments, which in turn would add to subsequent deficits, he said. The effects on the U.S. economy "would be severe," Bernanke said. "If early and meaningful action is not taken, the U.S. economy could be seriously weakened, with future generations bearing much of the cost," Bernanke said. Congress must act because "economic growth alone is unlikely to solve the nation's impending fiscal problems," Bernanke said. Bernanke didn't provide any specific suggestions to lawmakers. Before becoming Fed chairman last February, he pledged to try to stay out of advocating specific policies. He stressed that he was speaking only for himself and not necessarily for his colleagues at the Fed. Congress will face difficult choices, Bernanke said. Members of Congress who want to keep taxes low must accept that spending must be kept low as well, he said. At the same time, members who want to increase benefits must recognize the burden imposed on the economy from additional taxes, he noted.

[dcengr]

Congress is just reflecting the personality of the US populance in their appetite to acquire debt and spend now with tomorrow's money. Until the mindset of the populance changes, it won't change.. but that may come soon, like cycles typically do.

[nimblebear]

Here in lies the problem:

2.2 trillion through 2011.

http://www.armscontr...ives/002238.php

29 times the budget of 6 rogue countries.

[pdx5]

No politician wants to touch the 3rd rail of cutting social security benefits and medicare obligations. Therefore I see not much chance of avoiding the coming hyperinflation and economic collapse when boomers go in full retirement mode. The good news is we are 8-10 years away. Bad news is it won't be avoided.

[dasein]

No politician wants to touch the 3rd rail of cutting social security benefits
and medicare obligations.

SS is off budget and in surplus - problem is they keep using the money for something else (see DOD budget above) and cant pay it back. Funny Bernanke didnt say anything about paying for this war, just paying for "entitlements" - I take that as a political spin.

klh

[mss]

Folks, this has some interesting dollar numbers but really has little to nothing to do with TA, so please keep it very far away from politics. Thanks, mss

[pdx5]

Exactly right, SS is "currently" in surplus. But that surplus is being spent in budget and not saved for the future benefits of those paying in. So, we are accumulating future beneficiaries but not assets. The Iraq war is a big burden on spending side, but IT WILL END AT SOME POINT. Whereas the future benefits in SS & medicare just keep on accumulating like the energizer bunny.

[selecto]

PPT has to have been making some money; that helps. (Right, James?)