Treasury Raids Federal Pensions Until Debt Ceiling Hike
Reuters reports that the U.S. Treasury has begun raiding federal pension funds to keep the Obama administration afloat until the automatic debt-ceiling hike next week.
Part of the deal emerging from last year’s debt-ceiling stand-off which resulted in the supercommittee failure was a change in burden of approval: the $1.2 trillion dollar hike which before had to be passed by both houses of Congress is now considered passed unless both houses vote to block it—an unlikely event, especially in the Senate.
So this raiding of the pension fund does two things: First, it pressures Congress to act. It focuses the eyes of all federal employees whose pensions are at risk upon Congress, leaving Congressmen standing in the spotlight. And after all, the raided fund likely includes Congress’ pensions.
Secondly, and more importantly, the Treasury’s move is an almost arrogant voice of self-assurance that the debt-ceiling hike will indeed become a reality. The administration would be loathe to rob from its own pensions were it not quite sure it could pay them back in the near future. It may be acceptable to run Social Security on a phantom “trust fund,” but not the federal pensions. And borrowing from it permanently would be like robbing Robin Hood to pay Little John.
Meanwhile, the administration knows any effort from Congress to block the hike will be futile. While the House has already voted on a bill disapproving of the hike, the move is only symbolic. The Senate almost certainly will not follow, just as it refused to do in a similar measure last fall.
Besides, the Treasury has done this many times before, and has always gotten away with it—notably last spring when the whole stand-off began. –American Vision News
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WARNING! New Regulations Hide Taxes From The Public
There are two big reasons why people in this nation are disconnected with the true cost of government. One is, partially because of refundable tax credits, that 47% of the people in this nation do not pay any federal income taxes. The other reason they are disconnected is because decades ago our Federal government decided to withhold our taxes when we get our paycheck. This was a vehicle to grow government. At one time people in this nation actually received their whole paycheck and then were required to send a check into the government. The people who did this actually knew the exact amount they were paying because they were writing the check. Today, hardly anyone knows what their gross paycheck is (the amount before taxes), they only know their take-home pay (the net amount). The government had effectively decided to hide the amount of taxes you pay!
Our big, bloated Federal government is doing it again!
The next time you purchase an airline ticket you will not see any Federal taxes and fees associated with it (it used to be itemized). The U.S. Department of Transportation has now mandated that airlines HIDE the government’s taxes and fees in the price of the ticket!
In our opinion this will be just another vehicle to increase taxes and fees on the American people in an effort to increase government. Without transparency Federal bureaucrats could continually increase taxes and fees without your knowledge.
Don’t let this happen. Let Congress know that keeping government taxes and fees low and transparent is best. Contact your elected officials today! -Government Gone Wild
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'Uncertainty And danger': World Bank Warns Of Downturn Worse Than 2008
The World Bank warned Wednesday of a possible slump in global economic growth and urged developing countries to prepare for shocks that could be more severe than the 2008 crisis.
For the United States, the bank cut this year's growth forecast to 2.2 percent from 2.9 percent and for 2013 to 2.4 percent from 2.7 percent.
As reasons, it cited the anticipated global slowdown and the on-going fight in Washington over spending and taxes.
The bank also cut its growth forecast for developing countries this year to 5.4 percent from 6.2 percent and for developed countries to 1.4 percent from 2.7 percent.
For the 17 countries that use the euro currency, it forecast a contraction, cutting their growth outlook to -0.3 percent from 1.8 percent.
Global growth could be hurt by a recession in Europe and a slowdown in India, Brazil and other developing countries, the Washington-based bank said.
It said conditions might worsen if more European countries are unable to raise money in financial markets.
"The global economy is entering into a new phase of uncertainty and danger," said the bank's chief economist, Justin Yifu Lin. "The risks of a global freezing up of capital markets as well as a global crisis similar to what happened in September 2008 are real."
Separately Wednesday, the government of Germany — Europe's biggest economy — announced it had lowered its growth forecast for this year from 1 percent to 0.7 percent. However, it also predicted growth of 1.6 percent in 2013.
Developing countries that have enjoyed relatively strong growth while the United States and Europe struggled might be hit hard, Lin said. He said they should line up financing in advance to cover budget deficits, review the health of their banks and emphasize spending on social safety nets.
>Eurozone slammed by credit downgrades, collapse of Greek bond talks
Many governments are in a weaker position than they were to respond to the 2008 global crisis because their debts and budget deficits are bigger, Lin said at a news conference.
In the event of a major crisis, "no country will be spared," Lin said. "The downturn is likely to be longer and deeper than the last one."
The bank's outlook — in its "Global Economic Prospects" report issued twice a year — adds to mounting gloom amid Europe's debt crisis and high U.S. unemployment.
>S&P downgrades eurozone bailout fund to AA+
"It is very likely that most European countries, including Germany, entered recession in the fourth quarter of last year," said Hans Timmer, the World Bank's director of development projects.
Investors have cut investments in developing countries by 45 percent in the second half of last year, compared with the same period in 2010, Timmer said.
The report follows similar warnings about the global economy by its sister organization, the International Monetary Fund, and private sector forecasters.
>China’s growth cools, but still better than expected
Global growth might suffer from the interaction of Europe's troubles and efforts by China, India, South Africa, Russia and Turkey to cool rapid growth and inflation with interest rate hikes and other measures, the bank said.
China's expansion slowed to a 2 1/2-year low of 8.9 percent in the three months ending in December from the previous quarter's 9.1 percent.
As Europe weakens, developing countries could find "their slowdown might be larger than is necessary to cope with inflation pressures," Lin said.
Developing countries hurt
A global downturn would hurt developing countries by driving down prices for metals, farm goods and other commodities and demand for other exoprts, the World Bank said.
Slower growth is already visible in weakening trade and commodity prices, the World Bank said.
Global exports of goods and services expanded an estimated 6.6 percent in 2011, barely half the previous year's 12.4 percent rate, the bank said. It said the growth rate is expected to fall to 4.7 percent this year.
Prices of energy, metals and farm products are down 10 to 25 percent from their peaks in early 2011, Timmer said.
The United States is already feeling some pain from Europe's crisis. Exports to Europe fell 6 percent in November, the Commerce Department said last week. –MSNBC
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