Category: Happiness

Cutting the Deficit in Half, Is It a Fairy Tale?

President Barack Obama told a news conference at the end of the G20 conference in Toronto that all nations have agreed to cut their deficits in half by 2013.  So I asked myself:

What is the difference between the public debt and the deficit?

According to treasurydirect.gov  The deficit is the difference between the money Government takes in, called receipts, and what the Government spends, called outlays, each year. Receipts include the money the Government takes in from income, excise and social insurance taxes as well as fees and other income. Outlays include all Federal spending including social security and Medicare benefits along with all other spending ranging from medical research to interest payments on the debt. When there is a deficit, Treasury must borrow the money needed for the government to pay its bills.

We borrow the money by selling Treasury securities like T-bills, notes, Treasury Inflation-Protected securities and savings bonds to the public. Additionally, the Government Trust Funds are required by law to invest accumulated surpluses in Treasury securities. The Treasury securities issued to the public and to the Government Trust Funds (intragovernmental holdings) then become part of the total debt.

The current federal debt is $13 Trillion.  The deficit for fiscal year 2009, which ended Sept. 30, 2009 came in at a record $1.42 trillion, more than triple the record set in 2008.  The administration projects a shortfall of $1.6 trillion in the fiscal year that ends in September 2010.  The president’s immediate solution is to reduce domestic discretionary spending.  CNN reports that such spending amounts to 2% of the budget.  The government is about to ask for another $33 Billion for the Afghan War.  Republican lawmakers — joined by Democrat Ben Nelson of Nebraska — maintained a unified front to sustain a filibuster of the $110-billion bill for the extension of unemployment benefits. The vote was 57 to 41; the majority was three short of the 60 needed to cut off debate and bring the bill to a final vote. Enough Republicans will probably switch their votes next week to pass this bill.

Where will the spending cuts come from?  Perhaps it will be a fairy godmother that solves this dilemma.  Perhaps they won’t happen at all except in our dreams.

Answers to Long Term Care Insurance Questions

Jeff Radich of the Estate Plan Center LLC in Chisago City, MN keeps sending me his promotions.  This is really worthwhile information.  You must click the link.  This is one of the few sensible discussions on long term care insurance that I have ever heard.  It answers the question: Do I really need long-term care insurance?

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It never fails.  Almost 2-3 times a week I get questions about long-term insurance. It’s so common that I finally decided to do something about it.

Here’s why… where can you get objective advice on the subject of long-term care insurance? Almost anyone who understands the subject tries to sell you a policy.

That’s why I interviewed retirement expert Robert Carlson and in a second, I am going to give you the link to listen to the interview (at no cost).

Hopefully you will receive the objective advice from this call to make a wise decision.  In fact, Robert provides 4 alternatives to long-term care insurance that you may find a better option.  The interview is only 9 minutes and 48 seconds.

Another reason this interview is good is because of the source, Robert Carlson.

He’s a financial consultant, an attorney, an insurance expert, a retirement planner, and an investment advisor.

Not only that, but he’s author of The New Rules to Retirement and he is managing editor of Retirement Watch an online subscription newsletter that has more than 10,000 subscribers.

Bob really knows it all when it comes to retirement planning strategies. In fact, he’s been interviewed by many national publications on this issue including The Wall Street Journal, Barron’s, and The Washington Post.

This is a really good interview packed with solid information without any selling 🙂

I hope it helps you.

Use this link to listen to the interview

Simply click this link above and you should be able to listen to the interview right in your browser… but make sure your speakers are turned on.

Houston, We Have a Problem!

The tragic Gulf oil disaster of the past five weeks finally focused Congress’ attention on the serious safety problems with offshore drilling.  But why does it take a national disaster to get their attention?  

A bill to make our food safer has been sitting in Congress, near final passage, for a year. It would increase inspections and help food companies catch contaminants before the food gets to our local supermarkets.

Both the U.S. House and Senate passed Wall Street reform bills, but now a final bill must be worked out between them – and the lobbyists will be pressing for loopholes!

The Obama administration says the federal government payroll will grow to 2.15 million workers this year.  This number includes the military.  There will be 1.43 million civilian workers on the payroll in fiscal year 2010.  More surprising is that this number does not include postal workers.  My source for this data is a Washington Times article dated February 2, 2010.

Despite this enormous staff our government has failed to provide the health and safety, protection for our wild life, or the security we desire. 

The Food and Drug Administration has not protected society for a laundry list of errors caused by both food processors and drug manufacturers.  A recent good example is Yaz and Yasmin.  There are issues about its safety but the product is still being sold.  Remember the Peanut Corporation of America?  That company was selling contaminated product and was shutdown only after the spot light of the news media was focused on the issue.  Just today there is concern about children’s over the counter Tylenol and other child medications.

The Securities and Exchange Commission had data warning about Bernie Madoff but did nothing to stop his Ponzi scheme.  More recently the news reports that members of the SEC staff have been spending their days looking at internet porn sites.  There has been no effort to ensure the accuracy of bond rating agencies.

The President fired his chief coordinator for terrorist tracking as the result of the stumbles that have occurred.  The Christmas Day bomber failed as the result of his incompetence.  The Fort Hood massacre plan went undetected.  The Times Square bomber failed as the result of his incompetence.     

Now we have the Minerals Management Services Department of the Department of the Interior that clearly has not carried out its responsibilities in the Gulf Of Mexico.

Are Americans supposed to have confidence in their government?  Of course, but we do not.  Is it likely that another president could do a better job?  It’s not likely because the bureaucracy is too big.  If the government can’t do the job then why are we paying those high taxes?

I am Drinking Your Coffee

Businessweek reports that the biggest consumer of coffee is Finland.  Their per capita annual consumption is 608.2 Liters.  That is 2568 cups. A cup is 8 ounces.  Unless they usually drink their coffee black that leaves no room for cream.  So if they are like most people their consumption is more like eight cups per day.  Wow!

Americans are in 16th place at a mere 105.9 Liters per capita. This equals just 447 cups.  That is a mere 1.25 cups per person per day.  I am drinking someone else’s share at two cups a day.  Canadian consumption is 125.6 Liters.  Toronto has a Starbucks or Tim Hortons on every other corner in the downtown area.  No wonder that city is bustling with energy.  I can walk to Starbucks but there are a total of ten stores within three miles of my home plus many independent coffee shops.  OK, I drink my coffee at home.

Comparing Individual State Debt to Greek Debt

Reuters reports that California’s long term debt is over $159 billion.  New York state debt is $120 billion.  The amount all 50 U.S. states owe in debt and benefits for public workers is $1.026 trillion.  This data provided according to the analysis by the Citizens Budget Commission.

New York’s ability to pay its bills was estimated at a ratio of 1.099, meaning that for every dollar of resources it has, there is $1.099 worth of obligations.  By contrast California’s ratio works out to a more affordable 0.599, according to the study by the nonpartisan research group.

Greece’s foreign debt has risen to 300 billion euros ($441 billion), or about 125% of national GDP.  The GDP of California in 2008 was $1.5 trillion according to the U.S. Bureau of Economic Analysis.  New York’s GDP was about $1 trillion.   

 

Global comparison

Zimbabwe has the world’s highest public debt as a percentage of the economy. Select examples and overall rank:

Zimbabwe 304% (1)
Japan 192% (2)
Greece 108% (8)
France 80% (15)
Germany 77% (18)
U.K. 69% (22)
U.S. 58%* (42)
Iran 19% (103)
Russia 7% (124)

Source: CIA

* Does not include Treasury debt held by Social Security Administration and the Federal Reserve

Things aren’t so bad after all!