CBO report: Debt will rise to 90% of GDP

[Renae]

Hope and Change...

CBO report: Debt will rise to 90% of GDP - Washington Times

President Obama's fiscal 2011 budget will generate nearly $10 trillion in cumulative budget deficits over the next 10 years, $1.2 trillion more than the administration projected, and raise the federal debt to 90 percent of the nation's economic output by 2020, the Congressional Budget Office reported Thursday.

In its 2011 budget, which the White House Office of Management and Budget (OMB) released Feb. 1, the administration projected a 10-year deficit total of $8.53 trillion. After looking it over, CBO said in its final analysis, released Thursday, that the president's budget would generate a combined $9.75 trillion in deficits over the next decade.

"An additional $1.2 trillion in debt dumped on [GDP] to our children makes a huge difference," said Brian Riedl, a budget analyst at the conservative Heritage Foundation. "That represents an additional debt of $10,000 per household above and beyond the federal debt they are already carrying."

 

[Kushinator]

After it eclipses 100% will you see a serious spike in treasury yields. Either via coupon or face value.

 

[NoJingoLingo]

Hope and Change...

CBO report: Debt will rise to 90% of GDP - Washington Times

That's what you get when you allow Special Interests to run the government.

We need a new party, the first 3 planks must be:

Will institute Instant Runoff Voting.
Will institute 8 year term limits on Congress
Will institute Public Campaign Financing

Without those 3 things, our government will never return to the hands of the people. Of course, without those 3 things we'd never get a party to institute them. Catch 22, we're ****ed.

 

[American]

And with most new jobs under the Obama plan being in the fast food sector, GDP is sure to drop off. In fact with Obama in command we could get to 90% without increasing debt at all, just keep bring GDP down by having high paying jobs move overseas and issue brooms to the rest of the populace under govt work programs.

 

[Erod]

And with most new jobs under the Obama plan being in the fast food sector, GDP is sure to drop off. In fact with Obama in command we could get to 90% without increasing debt at all, just keep bring GDP down by having high paying jobs move overseas and issue brooms to the rest of the populace under govt work programs.

Our company decided to reduce staff by 15 percent (in addition to the 25 percent last summer) this coming June. Business is steady, but we anticipate costs to rise substantially in 2011.

I suspect that same scenario is being carried out across the country.

 

[Joe Steel]

Our company decided to reduce staff by 15 percent (in addition to the 25 percent last summer) this coming June. Business is steady, but we anticipate costs to rise substantially in 2011.

I suspect that same scenario is being carried out across the country.

Sounds like your management are idiots. Either they were overstaffed before the reductions or they're willing to be understaffed now. In either case, you might think a bout looking for a new job. Your firm is going to fold or they're going to work the life out of you.

 

[donsutherland1]

Sounds like your management are idiots. Either they were overstaffed before the reductions or they're willing to be understaffed now. In either case, you might think a bout looking for a new job. Your firm is going to fold or they're going to work the life out of you.

From the description in this thread, I wouldn't describe the company's management as "idiots." It appears that the company is facing a potential existential challenge. Such challenges usually arise from business models, cost structures, revenue outlooks (a function of industry structure, firm dynamics, competition, alternative technologies, etc).

It is very likely that the company in question has suffered a material and permanent deterioration in its revenue outlook (and its revenue is now stable but at a much diminished level) and/or has been experiencing persistent cost structure difficulties. Companies facing such circumstances are typically highly sensitive to even modest cost increases or worries about possible cost increases. Even as the health care law's major provisions do not go into effect for several years and it does not significantly alter the trajectory of national health costs, the law might be a marginal factor that exacerbates difficulties associated with the revenue outlook and/or uncompetitive cost structure.

Inefficiencies, an older work force, chronic underinvestment, relative disadvantages in cost structure vis-a-vis foreign competitors, emergent technology alternatives, over-leverage, dependence on inputs for which substantial price hikes are likely e.g., certain commodities, among many other factors could contribute to chronic cost structure/revenue challenges. Financially healthy firms do not lay off 40% of their workforce even in the face of severe recessions and slow economic recoveries.

The magnitude of layoffs involved suggests that the company has probably suffered a material and permanent decline in its revenue outlook and/or is suffering from a chronically uncompetitive cost structure. In that context, considering that U.S. health costs continue to rise at a multiple of national income (a cost curve that was not altered by the health legislation), the company very likely would have been announcing a similar decision, even if the legislation had been rejected.

 

[The Prof]

Sounds like your management are idiots. Either they were overstaffed before the reductions or they're willing to be understaffed now. In either case, you might think a bout looking for a new job. Your firm is going to fold or they're going to work the life out of you.

they haven't even seen the books and they're offering financial advice via a CHATROOM

LOL!

NINETY PERCENT OF GDP?!

dang, dudes...

keynes must be kicking in his sarcophagus

 

[NoJingoLingo]

And with most new jobs under the Obama plan being in the fast food sector, GDP is sure to drop off. In fact with Obama in command we could get to 90% without increasing debt at all, just keep bring GDP down by having high paying jobs move overseas and issue brooms to the rest of the populace under govt work programs.

Uh... it was the lack of job growth during the Shrub years that moved us to a service economy.

I doubt Obama will do anything to change that, however, because he can't.

 

[American]

From the description in this thread, I wouldn't describe the company's management as "idiots." It appears that the company is facing a potential existential challenge. Such challenges usually arise from business models, cost structures, revenue outlooks (a function of industry structure, firm dynamics, competition, alternative technologies, etc).

It is very likely that the company in question has suffered a material and permanent deterioration in its revenue outlook (and its revenue is now stable but at a much diminished level) and/or has been experiencing persistent cost structure difficulties. Companies facing such circumstances are typically highly sensitive to even modest cost increases or worries about possible cost increases. Even as the health care law's major provisions do not go into effect for several years and it does not significantly alter the trajectory of national health costs, the law might be a marginal factor that exacerbates difficulties associated with the revenue outlook and/or uncompetitive cost structure.

Inefficiencies, an older work force, chronic underinvestment, relative disadvantages in cost structure vis-a-vis foreign competitors, emergent technology alternatives, over-leverage, dependence on inputs for which substantial price hikes are likely e.g., certain commodities, among many other factors could contribute to chronic cost structure/revenue challenges. Financially healthy firms do not lay off 40% of their workforce even in the face of severe recessions and slow economic recoveries.

The magnitude of layoffs involved suggests that the company has probably suffered a material and permanent decline in its revenue outlook and/or is suffering from a chronically uncompetitive cost structure. In that context, considering that U.S. health costs continue to rise at a multiple of national income (a cost curve that was not altered by the health legislation), the company very likely would have been announcing a similar decision, even if the legislation had been rejected.

Did you hear about AT&T today?

http://www.att.com/Common/docs/chcdeck0228.pdf

AT&T will take $1B non-cash charge for health care - Yahoo! News

 

[American]

Uh... it was the lack of job growth during the Shrub years that moved us to a service economy.

I doubt Obama will do anything to change that, however, because he can't.

Really, and prior to that we were what kind of economy?

 

[donsutherland1]

Did you hear about AT&T today?

http://www.att.com/Common/docs/chcdeck0228.pdf

AT&T will take $1B non-cash charge for health care - Yahoo! News

Apparently, the 'increased tax burden' results from the closing of a loophole under which taxpayers were providing a subsidy to the companies and then the companies were treating that subsidy (a tax-free income stream) as an expense for tax purposes.

From CNBC:

These announcements followed statements from manufacturers Deere and Caterpillar , which said on Thursday that they are expecting a combined $250 million in charges this year as a result of changes to the $2.5 trillion U.S. health care system.

They can no longer deduct from their taxes the subsidies paid by the federal government for retiree drug benefits.

News Headlines

To illustrate what was happening, the following are the cases of two scenarios (using hypothetical numbers for illustrative purposes):

Scenario 1: What will be required under the new law
Annual health costs for retirees: $1,000,000
The company pays $800,000 of those costs; the federal government provides a subsidy for the remaining $200,000
The company has a tax rate of 20%

The company's net after-tax health expenses for its retirees is: $640,000 calculated as follows:

Company's payment: $800,000 less the tax benefit (20% * 800,000) = $640,000

Scenario 2: What was going on
Annual health costs for retirees: $1,000,000
The company pays $800,000 of those costs; the federal government provides a subsidy for the remaining $200,000
The company has a tax rate of 20%

The company's net after-tax health expenses for its retirees is: $600,000 calculated as follows:

Company's payment: $800,000 less:
[the tax benefit from deducting its expense (20% * 800,000) + treating the federal subsidy as an expense for tax purposes (20% * 200,000)] = 600,000

Under the latter scenario, taxpayers were not only paying $200,000 of the company's health costs via the tax-free subsidy, they were being forced to pay an extra $40,000 afterward, because the company was treating the subsidy as its own expense when, in fact, it was the taxpayers not the company who were actually incurring the expense.

 

[Cold Highway]

Shopping list

1. Food for both human and dogs

2. Gold and Silver

3. Ammo

 

[Deuce]

Shopping list

1. Food for both human and dogs

2. Gold and Silver

3. Ammo

In case of werewolves, make sure some of that silver IS ammo!

 

[The Prof]

concerning at&t and all the others, there are 2 very separate questions:

1. is closing this loophole the right thing to do in principle?

2. is closing this loophole NOW advantageous to our economy?

 

[The Prof]

Under the latter scenario, taxpayers were not only paying $200,000 of the company's health costs via the tax-free subsidy, they were being forced to pay an extra $40,000 afterward, because the company was treating the subsidy as its own expense when, in fact, it was the taxpayers not the company who were actually incurring the expense.

outstanding, except the taxpayers aren't really paying the 40G, they're really BORROWING the 40G and paying only the interest incurred from the loan

these days, bottom line, the govt can't really pay for anything, all of its revenues are tied up and liable (for decades, even), every penny of spending proposed at this point is clearly gonna have to be borrowed

you make a real good point and you explain it with great talent (in my opinion)

but the question remains, is NOW the expeditious time to hit at&t and all the others with that 40G per

you know what i'm getting at...

thanks much, you're good

 

[pendulum_jaw]

Cap and Trade legislation is next!

If the government had applied the same strategy to the Iraq War that it's applying to the American economy, we would have dropped five nuclear bombs in a row, one after another, on Baghdad; and the Middle East would be uninhabitable for the next 10,000 years.

 

[NoJingoLingo]

Really, and prior to that we were what kind of economy?

Well, the 90s we were a tech industry, before that manufacturing and before that agricultural.

 

[NoJingoLingo]

outstanding, except the taxpayers aren't really paying the 40G, they're really BORROWING the 40G and paying only the interest incurred from the loan

these days, bottom line, the govt can't really pay for anything, all of its revenues are tied up and liable (for decades, even), every penny of spending proposed at this point is clearly gonna have to be borrowed

you make a real good point and you explain it with great talent (in my opinion)

but the question remains, is NOW the expeditious time to hit at&t and all the others with that 40G per

you know what i'm getting at...

thanks much, you're good

If they fail because they aren't getting free tax money then they should fail right? You're not really more concerned about the jobless than keeping the markets pure, are you? Aren't you one of the, "let'em fail in the free market" crowd, regardless of whether we spiral into a depression or not?

 

[Councilman]

Brace yourselves the worst yet to come and it's going to absolutely the last vestiges of our economy because that is Obama's goal as laid out by the Cloward & Pevin Strategy.

Obama promise of fundamental change can't take place until he destroys the Nations economy so he can replace our whole system with Socialism/Marxism.

His every move has been in that direction and liberals have their collective heads so up the shoot they don't see it.

One can never have 20 20 hindsight until you pull your head out of ones ass.

Those who stand for nothing fall for anything. Or put another way are Obamanites.

 

[Morality Games]

Brace yourselves the worst yet to come and it's going to absolutely the last vestiges of our economy because that is Obama's goal as laid out by the Cloward & Pevin Strategy.

Obama promise of fundamental change can't take place until he destroys the Nations economy so he can replace our whole system with Socialism/Marxism.

His every move has been in that direction and liberals have their collective heads so up the shoot they don't see it.

One can never have 20 20 hindsight until you pull your head out of ones ass.

Those who stand for nothing fall for anything. Or put another way are Obamanites.

... and if it turns out Obama wasn't plotting a socialist takeover after all, I'm sure you are honorable enough to apologize to the people you claim are too stupid not to recognize it.

 

[NoJingoLingo]

Brace yourselves the worst yet to come and it's going to absolutely the last vestiges of our economy because that is Obama's goal as laid out by the Cloward & Pevin Strategy.

Obama promise of fundamental change can't take place until he destroys the Nations economy so he can replace our whole system with Socialism/Marxism.

His every move has been in that direction and liberals have their collective heads so up the shoot they don't see it.

One can never have 20 20 hindsight until you pull your head out of ones ass.

Those who stand for nothing fall for anything. Or put another way are Obamanites.

ZOMG ARE YOU SERIOUS?!?!?? "Help! Help! The sky is falling! I have to go tell the king!" "Oh, help! The sky is falling!" "I saw it with my own eyes, and heard it with my own ears, and part of it fell on my head!"

Umm, our corpracongress will never allow it, go back to bed Chicken Little :roll:

 

[Erod]

ZOMG ARE YOU SERIOUS?!?!?? "Help! Help! The sky is falling! I have to go tell the king!" "Oh, help! The sky is falling!" "I saw it with my own eyes, and heard it with my own ears, and part of it fell on my head!"

Umm, our corpracongress will never allow it, go back to bed Chicken Little :roll:

Obama doesn't care one iota that the economy is in the crapper. That is by design.

You rip it to shreds, then build it back like you want to. Just like Lenin said, you control their healthcare, you control everything.

Obama is laying the foundation like a true martyr. He may be a one-termer, but he doesn't care. Get his ideology woven into the fabric, then let it spread virally like it did in Europe.

 

[American]

Apparently, the 'increased tax burden' results from the closing of a loophole under which taxpayers were providing a subsidy to the companies and then the companies were treating that subsidy (a tax-free income stream) as an expense for tax purposes.

From CNBC:

These announcements followed statements from manufacturers Deere and Caterpillar , which said on Thursday that they are expecting a combined $250 million in charges this year as a result of changes to the $2.5 trillion U.S. health care system.

They can no longer deduct from their taxes the subsidies paid by the federal government for retiree drug benefits.

News Headlines

To illustrate what was happening, the following are the cases of two scenarios (using hypothetical numbers for illustrative purposes):

Scenario 1: What will be required under the new law
Annual health costs for retirees: $1,000,000
The company pays $800,000 of those costs; the federal government provides a subsidy for the remaining $200,000
The company has a tax rate of 20%

The company's net after-tax health expenses for its retirees is: $640,000 calculated as follows:

Company's payment: $800,000 less the tax benefit (20% * 800,000) = $640,000

Scenario 2: What was going on
Annual health costs for retirees: $1,000,000
The company pays $800,000 of those costs; the federal government provides a subsidy for the remaining $200,000
The company has a tax rate of 20%

The company's net after-tax health expenses for its retirees is: $600,000 calculated as follows:

Company's payment: $800,000 less:
[the tax benefit from deducting its expense (20% * 800,000) + treating the federal subsidy as an expense for tax purposes (20% * 200,000)] = 600,000

Under the latter scenario, taxpayers were not only paying $200,000 of the company's health costs via the tax-free subsidy, they were being forced to pay an extra $40,000 afterward, because the company was treating the subsidy as its own expense when, in fact, it was the taxpayers not the company who were actually incurring the expense.

So the govt was taxing the subsidy and the company was deducting the tax?

 

[Politics101]

After it eclipses 100% will you see a serious spike in treasury yields. Either via coupon or face value.

Gold is the only safe bet. Obama killed the U.S. Dollar.. :doh