(1/30/12)- The Senate voted on Thursday, January 26, by a 52-to-42 not to take up the House's "resolution of disapproval", as we noted in our item dated 1/21/12 below. The vote was along party lines, and as a result thereof, the debt ceiling will be increased by $1.2 trillion to$16.4 trillion, from the $15.2 trillion current level.

As recently as fiscal year 2009, the debt ceiling was $12.1 trillion. The deficits the last two years were about $1.3 trillion, down from the $1.4 trillion in 2009.

When President Barack Obama came into office he hoped to bring the deficit down to more manageable levels during his first term in office. Shortly after he took office the country was being pummeled by the recession of 2008 that lasted through early in the summer of 2010.

(1/21/12)- The House of Representatives voted 239-176 to reject the increase in the debt ceiling by $1.2 trillion. Three Republicans did not vote in favor of the rejection. Representative David Dreir (R., Cal.) joined most Democrats in supporting the increase, and two other Republicans voted "present".

The measure will now go on to the Democratic controlled Senate that is expected to approve the increase. Even if the Senate voted against the increase, President Obama would veto that measure, so that the automatic increase of $1.2 trillion in the debt ceiling will take place..

(1/19/12)- The U.S. Treasury began to limit its investments in the exchange stabilization fund, a reserve account related to foreign-exchange holdings so that it would stay under the legal debt limit. Treasury Secretary Timothy Geithner sent a letter to Senate Majority Leader Harry Reid (D., Nev.), House Speaker John Boehner (R., Ohio) and other Congressional leaders in which he stated: "unless a joint resolution of disapproval is enacted, the debt limit will be increased…effective January 27, 2012".

Mr. Geithner also told Congress that until the limit is increased, the Treasury will be unable to invest fully in the Government Security Fund, or G-Fund, a money-market defined contribution retirement fund for federal employees.

As we noted in our item dated 1/14/12, even if both houses of Congress voted against the automatic $1.2 trillion increase in the debt ceiling, the president could veto that resolution and the increase would then automatically take place.

Once this debt-ceiling increase takes place, it is unlikely that a further increase will be needed until after the election.

(1/14/12)- President Obama notified Congress on Thursday, January 12^th that the government was near its $15.194 trillion borrowing limit.

Under the terms of the budget act, Congress has 15 days after the president submits a request for additional borrowing authority to vote on a motion to block it. The House will come back into session on January 17^th and the Senate will do so the following week.

If Congress votes against the automatic $1.2 trillion increase in the ceiling, the president can veto their action, so that the increase would then take place.

As of Tuesday, the U.S. debt was just $25 million below the debt ceiling. The Treasury Department already had begun emergency measures to delay hitting the limit, while it waited for Congress to return from its holiday break.

The Treasury will limit or suspend investments in certain federal pensions so as to be able to stay within the confines of the debt-ceiling limit until the automatic increase takes place.

The federal government has operated at about a $1.3 trillion deficit for the last 2 years, but that deficit should decrease in the fiscal 2011-2012 year, mainly because of the improving economy.

(12/31/11)- Under federal budgetary law, the administration is required to notify Congress when the government's borrowing comes within $100 billion of the current debt ceiling which is currently $15.194 trillion. This limit is expected to be reached on Friday, December 29^th, so the president will ask Congress for a $1.2 trillion increase to $16.394 trillion.

The latest increase would be the third and final one called for under the deal that Congress and the president reached in August. The two prior increases came to a total of $900 billion.

The Republican led House could try and block the automatic increase that is due to go into affect on January 14^th, but the Democratic led Senate is likely to oppose any attempt to alter the prior agreement. If both houses of Congress voted to block the increase, Mr. Obama could veto the legislation.

In the fiscal year that ended September 30^th, the federal government spent $3.6 trillion and collected $2.3 trillion

(12/19/11)- A provision in California's budget for the fiscal year that began July 1 required midyear cuts if less revenue materialized than hoped for seems likely to occur causing a shortfall of about $2.2 billion. Governor Jerry Brown announced that the state had expected about $88.5 billion in revenue, but it now looked like revenue would come in at about $83.3 billion

California's Legislative Analyst's Office had estimated a $3.7 billion shortfall last month, so even worse cuts will not have to be enacted.

Those being cut include: $100 million from in-home health care for the elderly; eliminating $248 million in state money allocated for busing students; and trimming $100 million from the California State University and $100 million from the University of California systems.

It was originally expected that 7 days would have to be cut from the public school calendar, but this will not be necessary.

All this is taking place even though the state's tax revenue is higher this year than it was last year and state and municipal layoffs have taken place.

On the federal budget front, the continuing resolution that is keeping the government funded expired on December 16^th. Legislative leaders have finally reached an agreement on a budget for the fiscal year that began on October 1, 2011, but this budget was not finalized in time so that another continuing resolution was needed to keep the government running until it could be officially passed and sent on to the president for his signature.

(12/2/11)- Slowly but unevenly, state budgets continue to improve in spite of all the dire predictions about our economy and the European debt crisis. For the second year in a row state budgets are due to rise which in the case of the 2012 fiscal year means an increase of 2.9% to $666.6 billion, according to a recently released report from the National Governors Association and the National Association of State Budget Officers.

Spending cuts continue to be the states' primary budget-balancing tool. 29 states used targeted spending cuts to narrow their fiscal year 2012 budget shortfalls, while 18 states made across-the-board reductions in spending, while 17 states narrowed the gap by reducing aid to local governments.

Cut-off of federal stimulus money means less funding available from the federal government as reflected by the fact that only $3 billion in stimulus money is available in fiscal 2012 versus the $50.3 billion that was available in fiscal 2011

For fiscal year 2012,, state budgets call for a $19.4 billion increase in Medicaid spending, while other high priority items such as spending on higher education is due to fall by $3.2 billion.

(11/20/11)- As we noted in our item dated 10/1/11 below, the continuing resolution that kept the government funded was due to expire on 11/18/11. Well the battle isn't entirely over, but with the passage of another continuing resolution that will expire on December 16^th, a portion of the federal fiscal year budget that ends on September 30^th has been set.

In a 70-30 vote in the Senate, and a 298-121 vote in the House, several of the federal governmental departments received their allocations from the federal budget for their 2011-2012 budgets. In total $128 billion was appropriated for the departments of Agriculture, Commerce, Justice, Transportation and Housing and Development.

Once Congress had passed the measure and sent it on to the president for his signature, Mr. Obama directed that a machine imprint of his signature be used to sign the legislation since he is overseas and could not do it in person.

For all other departments not included in this resolution, spending must be maintained at present levels through at least December 16^th.

(10/30/11)- The 12-member super congressional committee has until November 23^rd to come up with its report. The panel's membership is split equally between Democrats and Republicans.

The two leaders of the panel are Senator Patty Murray, Democrat of Washington and Representative Jeb Hensarling, Republican of Texas. The committee is supposed to write legislation reducing deficits by at least $1.2 trillion over 10 years.

If legislation to save that amount is not enacted, the president is to make up the difference by imposing across-the-board cuts in most military and civilian programs in January 2013

(10/19/11)- The Congressional Budget Office, in its monthly assessment of the government's finances estimated that the federal government ran a $1.3 trillion deficit for the fiscal year 2011, which ended on September 30^th. This was the same amount of deficit as it was for fiscal year 2010.

The deficit was the equivalent to 8.6% of the gross domestic product, down from the 8.9% in fiscal 2010, but still was the third-highest percentage since 1945.

(10/7/11)- In a session that only lasted about 10 minutes, the House of Representatives voted 352 to 66 to approve the continuing resolution passed by the Senate last week that will keep the government funded through November 18^th. The measure then went to President Obama for his signature.

53 Republicans opposed the measure, and 13 Democrats joined them. The Republicans who opposed the measure felt that there were not enough offsetting cuts contained therein.

Congress now has some time to get a budget passed for the fiscal year that began September 1, 2011, but you don't have to be a Las Vegas odds-maker to recognize the fact that it is unlikely to be done even by that date.

(10/1/11)- It took only 6 minutes for the House of Representatives to pass the continuing resolution that had already been passed by the Senate that will keep the government funded through October 4. Please see our item dated 9/28/11 below for more on this matter. Representative Andy Harris, Republican of Maryland presided over the pro forma session, since the House was in recess for the week.

When the House reconvenes next week, it will take up the more contentious continuing resolution to keep the government funded through November 18^th. Once again Congress will probably embarrass itself as the fight between the Republicans and the Democrats regarding having offsetting cuts or not goes down to the wire.

(9/28/11)- The Senate voted Monday night on two funding measures that will keep the government funded through November 18^th. The first continuing resolution would keep the government going through October 4, and the second measure would be the needed continuing resolution funding bill to keep it going through November 18^th.

The first measure came to pass because Federal Emergency Management Agency's( FEMA) officials announced that its disaster-relief fund still had $114 million left, and therefore would not run out of funds before the end of the month. That meant that no emergency funding was needed for at least a few days, so that the House, when it reconvenes will have time to act on the stop-gap measure to fund the government through the 18^th of November.

The Senate vote on the continuing resolution funding bill was 79-12 in favor. The House can pass the measure to fund the government through October 4, at a pro forma session, as long as no one objects, and does not have to re-convene to do so.

The continuing resolution passed by the Senate extends the financing for government agencies for 7 weeks with a 1.5% across-the-board cut from current levels. No offsetting cuts are included in the bill.

(9/24/11)- The Senate rejected the stop-gap spending bill passed by the House, as we discussed in our item dated 9/23/11 below. The vote rejecting the measure was 59 to 36.

Republican House leaders had convinced conservatives to vote in favor of the bill by cutting off a $100 million loan for Solyndra, a now-bankrupt maker of solar panels under scrutiny for its ties to the White House, plus the $1.5 billion in funding for the Energy Department's loan program to promote enerby efficient cars .

Although Congress is scheduled to go into recess next week, Democratic Senator Harry Reid of Nevada said that he would call the Senate into session on Monday. Republican House Speaker John A. Bohner of Ohio will probably do the same with the House.

Both sides indicated that they will continue to negotiate the matter over the weekend.

(9/23/11)- As noted in our item dated 9/19/11 below, the federal government needs to pass a stop-gap funding bill by September 30, but the Senate and the House have different measures that leave a wide gap between the two of them, or the government will have to close down.

The House, late Thursday night, voted to pass the omnibus stop-gap spending measure that would fund the government through November 18^th. The measure was the same one that had been rejected Wednesday. It increased funding for the Federal Emergency Management Agency's( FEMA) by $3.5 billion, and cut the Energy Department's loan program that promotes energy efficient cars.

Since the Senate measure calls for additional funding of $6.9 billion in its stop-gap funding measure, with no offsetting cuts, the two differing bills will have to be reconciled with Congressional leaders promising to keep their respective bodies in session over the weekend, since neither the House nor the Senate will be in session next week.

The House on Wednesday rejected the pending stop-gap measure by a 230 to 195 margin, with both Tea Party Republicans and Democratic House members voting against the bill. Six Democrats joined 189 Republicans in voting for the measure, while 48 Republicans joined 182 Democrats in opposing the bill.

Congress will not be in session next week, so its members are rapidly running out of time in passing a measure that can be acceptable to the members of the Senate.

The Tea Party Republicans voted against the bill because the offsetting $1.5 billion in cuts were insufficient and the Democrats voted against it because the $3.65 billion was not enough to properly fund FEMA. The $1.5 billion cut was from an Energy Department's loan program that promotes energy efficient vehicles.

The House version of the spending bill included $3.65 billion to replenish the Federal Emergency Management Agency's( FEMA) disaster relief fund, which is paid for by offsetting cuts elsewhere. The Senate version of the measure calls for about $6.9 billion to go to FEMA, and it does not provide for any offsetting cuts elsewhere in its stop-gap bill.

The FEMA disaster relief fund is down to $270 million and is faced with funding problems because of the expenses it is incurring in connection with the tornado in Joplin, Mo., in May, Hurricane Irene in August and other catastrophes this year

Are we going to be faced with another example of the petty bickering by Congress as we saw in the debt ceiling fight last month, or will the politicians realize that the public is fed up with their political posturing for the upcoming election?

Either the Republicans in the House will have to find an acceptable amount to get the Democrats in the House to go along with the measure, or the government will come to a standstill.

(9/19/11)- With the advent of September 30^th just around the corner, and with that date coming up, it means it is the end of the federal government's fiscal year. To no ones surprise, the government will fail once again to have a budget in place by that date.

In order to keep the government running, the House passed a stopgap funding measure that will maintain federal spending for the first 49 days of the fiscal year 2012, through November 18, with a 1.5% across-the-board cut from current levels.

The stopgap bill includes $3.65 billion in assistance for people affected by Hurricane Irene, wildfires, floods, tornadoes and other natural disasters. Cutting a loan guarantee program for production of more fuel efficient cars would offset $1billion dollars of this amount.

The Senate had earlier in the week, by a 62 to 37 vote approved a $7 billion disaster relief measure that rejected any offsetting costs.

(9/15/11)- The U.S. Treasury Department reported that the government operated at a $134.15 billion deficit last month. This was much larger than the deficit in August 2010, which was $90.53 billion.

The 11-month total deficit for fiscal 2011 stood at $1.234 trillion at the end of August 2011, compared to the total deficit of $1.26 trillion at the end of August 2010.

The Congressional Budget Office predicts that the federal government will run a $1.28 trillion deficit for the fiscal year 2011 that ends on September 30^th.

(8/30/11)- Personal income taxes made up 36% of states' revenue in 2008, up from 26% in 1978 according to the Nelson A. Rockefeller Institute of Government in Albany, N.Y. A large portion of this income came from capital gains, with the stock market rising through 2007. In 2008 a different story evolved, since the Dow Jones dropped precipitously that year, through March of 2009.

Subsequent to March 2009, through April 2011 the Dow Jones rose about 90%. A pullback has ensued since the end of April, but the gain still is about 80% up through today.

(8/16/11)- According to the latest figures from the U.S. Treasury, this country spent $129.38 billion more than we collected last month, raising the deficit for the first 10 months of the fiscal year 2011 to $1.1 trillion. Obama officials have predicted that the deficit for the full year would be $1.65 trillion.

As large as this deficit is, it still is less than what it was for the comparable period in fiscal 2010.

(7/29/11)- One of the many reasons why we lose confidence in governmental reports is because the data that is reported oftentimes prove to be incorrect. As an example of this "incorrect information" the hard deadline of August 2 in connection with reaching the debt ceiling is now proving to be not such a "hard deadline".

Thanks to an increase in tax revenues, and some maneuvering by the Treasury Department it now seems as if the government won't run out of money until August 10^th. Please keep in mind that the government is dealing with trillions of dollars and the ability to borrow from other sources on a temporary basis, so stay tuned on this one.

(7/25/11)- The August 2 deadline is a little more than a week away for the debt-ceiling to be increased from its $14.29 trillion limit and no bipartisan agreement is even close in regards to the budget compromise between the Democrats and the Republicans.

Presiden Barack Obama and Republican House Leader John Boehner continue their rhetoric while little gets accomplished. The president's target date for having an agreement in place by July 23^rd is past and nothing has been settled as of this date.

Conservatives, moderates, liberals and Tea Party members continue to draw lines in the sand. It looks like it will go down to the wire.

(7/19/11)- As we pointed out in our item dated 7/3/11 below, state and local tax revenues grew in the first 3 months of 2011. On the other hand, local property tax revenues fell by 1.7% in the same quarter, according to the latest statistics from the Census Bureau.

The cause of the drop is twofold; assessed valuations for local properties have dropped in the last few years, and local governments are unwilling or unable to raise property tax rates. Moody's Investors Services estimates that property taxes bring in more than a quarter of local-government revenues. Some economists have estimated that property taxes bring in about up to 45% of a state's revenues.

As we pointed out in the item dated 7/3/11 sales and income tax revenues are a truer indication of current economic conditions, rather than property taxes, which are a trailing indicator of the economy.

Property taxes fell 3% for local governments, according to those same Census Bureau statistics, and this was the first time since 1963 that there were two quarters in a row in which property tax revenues declined.

(7/12/11)- Medicare and Medicaid insure more than 100 million people, account for 23% of all federal spending and cuts to both are likely to be an important part of any budget agreement. Military spending, which accounts for about 20% of federal expenditures, will be part of the budget agreement also. Since these two areas are the biggest items on spending side of the ledger, it is only reasonable to expect that they will be cut.

In spite of all the rhetoric coming out of Washington to the contrary, revenue increases, sometimes known as tax increases have to be part of the final agreement also.

(7/3/11)- As a further indication of the improving health of the U.S. economy, as gradual as it may be, state and local tax revenue grew 4.7% to $321.6 billion in the first three months of 2011 compared with the same period a year earlier according to U.S. Census Bureau data. State revenue grew by 9.3% in the quarter, whereas local revenue fell by 0.64% in the second consecutive quarter of declines.

This was the 6^th quarter in a row of year-over-year state and local tax revenue growth. Local revenue continues to falter because of falling property taxes that is the biggest source of revenue for local governments. Income tax and sales tax income goes to the states, so that is why they continue to show growth.

An estimated $135 billion in federal stimulus funds will no longer be available to help the states with their budgetary problems this year.

(6/17/11)- The 6-member negotiating debt ceiling and budget deficit reduction panel that is attempting to come up with a compromise by August 2 consists of Vice-president Joe Biden, House Majority Leader Eric Cantor (R., Va.), Rep. Chris Van Hollen (D., Md.), Sens. Danial Inouye (D.Hawaii) and Max Baucus (D.Mont.) and Rep. Jim Clyburn (D., S.C.).

Treasury Secretary Tim Geithner has stated that unless the budget debt ceiling of $14.29 trillion is increased by August 2, the U.S. Treasury will default on its obligations. The vice-president has stated that he hopes to reach an agreement on the debt ceiling increase by July 1, which then must be presented to Congress for its approval.

(6/13/11)- One of the brightest spots in the economy over the last 2 1/2 years has been the stock market. From a low of about Dow 6,500 in March of 2009 it had risen to about 12,800 in April. With the housing market continuing to falter and unemployment running very high many economic experts were puzzled by this strange behavior.

One of the big question marks that the economy is faced with is the fact that the U.S. Treasury has estimated that this government will default on our Treasury obligations unless Congress increases the debt ceiling of about $14.3 trillion by August 2.

With the stock market having dropped from its high reached on April 29, to the below 12,000 Dow level as of June 10^th negotiations are finally picking up. The negotiating group led by Vice President Joe Biden plans to meet 3 times this week, compared with the 6 total meeting that have been held since March.

Basically the Democrats favor tax increases and the Republicans favor spending cuts. The federal government's $3.7 trillion budget in fiscal 2011 is expected to have a deficit of $1.5 trillion.

(6/6/11)- Forty governors have recommended spending more in their 2012 fiscal year, which starts in July, than in the year-earlier period, according to the latest report from the National Governors Association and the National Association of State Budget Officers.

In the past three years, states have used an estimated $135 billion in federal stimulus funds to balance their budgets, but those funds will not be available in 2012.

Medicaid accounted for just over a fifth of states' spending in 2010, even though most of the states attempted to cut Medicaid spending as much as possible.

The governors' proposed 2012 budgets called for a net of $13.8 billion in new taxes and fees, compared with $6.2 billion in tax increases in 2011, and 423.9 billion in 2010

(5/22/11)- Slowly but surely, the dire financial straits caused by the recession of 2008 seem to be ebbing for many of the states. California and New Jersey have been in the limelight recently with announcements about their narrowing budget deficits. Stock market gains and improved corporate earnings are the main reason for the improvement, but various actions taken by the states to reduce their expenditures have also added to the improved situation.

Pennsylvania announced earlier this month that it had collected $506 million more in taxes this year than it had predicted it would. In the case of the state of Michigan the pleasant surprise came to $429 million more in revenue than had been previously expected.

On the other hand the federal stimulus $150 billion in aid will no longer be available to most states.

The Center on Budget and Policy Priorities estimated that 44 states face deficits of roughly $112 billion, so hard times still lie in front of us,

(5/14/11)- U.S.Treasury Secretary Timothy Geithner now estimates that the $14.294 trillion debt ceiling will be hit on August 2,If the ceiling is hit, the federal government won't be able to pay all its bills, which would have a "catastrophic economic impact". Many Republican congressmen feel that the treasury can further delay this deadline, so that August 2 is not a "do or die" target date.

(4/24/11)- Following up on our item of 2/10/11 below, with 45 states now having reported their tax revenue for the first two months of this year, the increased income stood at up 9.5% from the same period a year ago, according to a report issued by the Nelson A. Rockefeller Institute of Government at the State University of New York.

If this pace holds up for the rest of the quarter, it would be the fastest growth rate since the second quarter of 2006.

Since states get most of their revenue from income and sales taxes, the improving economy is the main reason for this increase. Local governments which are dependent on property taxes for most of their revenue, continue to see declines in income, since property taxes are first showing the affects of the decrease in values for homes, as tax assessments also continue to drop.

In the first two months of the year, revenues from personal income taxes increased 14.2% in the 45 states tracked by the Institute, while corporate income taxes revenues were up 11.5% and sales tax revenues rose 5.2%.

States collected $715 billion in total tax revenue in 2010, about $60 billion or 7.8% below the level in 2008, before the recession began.

In light of these improving numbers, it is not surprising to see the Dow Jones Average climb above the 12,500 mark, which is a new recovery high for the last two years. For comparative purposes the Dow was at roughly 6,500 in March of 2009.

(4/16/11)- Congress passed, and sent on to the president for his signature the 2010-2011 fiscal year budget bill that had been due on October 1, 2010. As we noted in our items below, the government remained funded through "continuing resolutions". The president has stated that he would sign the budget bill even though it contained over $38 billion in cuts that had been negotiated with the Republicans.

The House voted 260 to 167, in favor of the budget with 59 Republicans opposing its passage because they thought it did not cut spending as much as the $100 billion that they originally had hoped for. The $100 billion was cut to $61 billion, but after prolonged negotiations between Republican House Speaker John A. Boehner, Senate Democratic leader Harry Reid and the president, that figured was pared to $38 billion.

Many of the newly elected House Republican representatives voted against the measure, which therefore required the votes of the House Democrats in order for the bill to be passed.

Republican Representative Louie Gohmert would have been the 60^th Republican in the House to have voted against the bill, but her arrived too late for his vote to be counted.

The Senate voted 81 to 19 in favor of its passage.

The road only gets rockier from here as the next battle in connection with the federal government's finances is the need to increase the debt ceiling which according to Treasury Secretary Timothy Geithner will be reached early in May. The U.S. government had $14.216 in total debt outstanding as of last Monday, the latest available date, just under the $14.294 trillion cap.

The treasury will be able to extend the timeframe for default until probably about mid-July, which therefore is when the deadline will be reached.

In addition to the debt ceiling, Congress will have the 2011-2012 fiscal year budget to contend with.

(3/20/11)- The Senate, approved 87-13 the "continuing resolution" measure adopted by the House that will keep the government funded through April 8^th. It now goes to the president for his signature.

By a vote of 271 to 158 the House passed a three week "continuing resolution" that would extend government financing through April 8th.. The measure is expected to contain another $6 billion in cuts that President Obama and the Democrats have already agreed to. More than 50 Republicans opposed the measure including 21 of the 87 Republican freshmen, saying they wanted to deal with the deficit now

In the final vote, 186 Republicans favored it along with 85 Democrats. Fifty-four Republicans and 104 Democrats opposed it.

Although this measure is expected to be approved, any future "continuing resolutions" are going to be tough to come by, with fiscal conservatives seeking more spending cuts than President Obama is willing to agree to.

The deficit for February was the biggest one-month deficit in history at $222.5 billion. Federal revenue for the month was $110.7 billion, while spending totaled $332.2 billion according to the latest Treasury Department figures.

Early refunds go out in February while filers have just begun to filter into the revenue side of the equation. As indicated below this fiscal year 2011 is expected to show that the government will end the year with the largest deficit in history at $1.65 trillion dollars.

(3/11/11)- The Senate approved the continuing resolution, as proposed by the House, that will keep the government running through midnight March 18 and President Obama signed the bill.

In a report issued by economists at the Pew Center on the States and the Nelson A. Rockefeller Institute of Government, it was concluded that states overestimate their tax revenue during tough economic times, and thus have to face the consequences when those estimates prove to be too rosy.

The authors of the report concluded that during the depth of the latest recession in 2009, income forecasts by all 50 states overshot reality by a total of $49 billion.

The median state overestimated by 10.2% in the recession of 2009, while during normal economic times the median revenue estimat was under by 1.5%, leading to a $10 billion surplus nationally.

(3/2/11)- The House approved and sent on to the Senate a 2-week continuing resolution yesterday that will keep the governmental operations open through midnight March 18, as we discussed in our item dated 2/28/11 below.

The proposal that the House approved contained $4 billion in spending cuts, and the president is expected to sign the measure once the Senate approves it.

(2/28/11)- The latest press reports indicate that the Republicans and Democrats are close to agreeing to a compromise that would extend the timeframe beyond the March 4 midnight deadline for the continuing resolution that would keep the government operating for at least another two weeks, or until midnight March 18.

Under the proposed compromise to extend the March 4 deadline there would be a total of $4 billion in spending cuts. A saving of $1.2 billion would result by ending eight education, transportation and other programs that President Obama had previously sought to close down. Another $2.8 billion would be saved by eliminating earmarks in the current budget.

The House is expected to approve the temporary measure on Tuesday, with the Senate acting shortly thereafter so that the proposal could reach the president shortly before the expiration date of March 4 midnight Friday.

(2/26/11)- Just how serious are the budget shortfalls that the states are projecting for their fiscal year 2012 budget shortfalls? Are there any states that are not projecting budget shortfalls for their fiscal year of 2012 budgets?

According to data from the Center on Budget and Policy Priorities there are only 4 states in the Union that are not projecting budget shortfalls. They are Alaska, Arkansas, North Dakota and Wyoming. Estimates are not in yet from Alabama, New Hampshire and Tennessee. All other states are projecting shortfalls that will have to be dealt with in the coming months.

There are a total of 10 states that are projecting shortfall for their fiscal year of 2012 at 20.0% or greater. They are Nevada (45.2%); Illinois (44.9%); New Jersey (37.4%); Texas (31.5%); California (29.3%); Oregon (25.0%); Minnesota (24.5%); Louisiana (22.0%); Connecticut (20.8%) and North Carolina (20.0%).

President Barack Obama's 2012 budget proposal projects this year's federal deficit will reach $1.6 trillion, the largest deficit on record. The Congressional Budget Office (CBO), the nonpartisan arbiter of fiscal matters recently had estimated that the budget deficit for the fiscal year of 2011-12 would be $1.48 trillion.

The budget deficit in fiscal 2010 was $1.3 trillion.

Social Security, Medicare and other entitlement programs will consume about 60% of all federal spending, not including interest on the debt next year, or $2 trillion according to the CBO. By 2012 it is estimated it will devour 68%, and cost $3.3 trillion according to the CBO figures.

(2/10/11)- The "continuing resolution" that will keep the federal government operating in the absence of a budget is due to expire on March 4, 2011. Under the terms of a continuing resolution, governmental agencies can only spend the same amount as they spent under the fiscal 2010 budget.

The debt ceiling is $14.3 trillion, and the Treasury Department now estimates that the country will reach that level sometime between April 5 and May 31, depending on the state of the economy, tax receipts and other factors. The Treasury could extend that date by a few months if it wants to borrow from some of the other government accounts that are available as it has done some times in the past.

Right now we are about $200 billion shy of the $14.3 trillion level.

There has been a lot of media attention paid to the fact that states are faced with huge budgetary deficits, and even the specter of bankruptcy has been brought up. On the other side of the ledger we have the fact that state tax revenue grew at the fastest rate in nearly five years during the fourth quarter in 2010.

State tax collections increased 6.9% in 41 states that have reported their revenue, according to a report issued recently by the Nelson A. Rockefeller Institute of Government at the State University of New York. If that pace holds once the other states report their numbers, that will be the fastest rate of growth since the second quarter of 2006.

Income tax collection rose at the rate of 10.7% in the 41 reporting states, including California where the percentage income-tax increase was 32%

Corporate income taxes were the fastest growing category in the quarter, rising 14.8%. State sales taxes also grew nicely at the 6.0% rate.

One of the biggest problems that the states now face is the fact that about $150 billion in stimulus aid from the federal government will no longer be able to help the states. Build America bonds, which also helped to ease the financial burden for many states will no longer be available with their federal subsidy for the states.

(1/31/11)- The Congressional Budget Office (CBO) has increased its August estimate of the budget deficit by $414 billion to nearly $1.5 trillion for the federal fiscal year of 2011 that ends on September 30, 2011. The deficit was $1.4 trillion in 2009 and $1.3 trillion in 2010. Part of the increase was due to the agreement reached by President Obama and the Republicans on extending the Bush-era tax legislation.

The CBO estimated that the deficit would fall to $1.1 trillion in fiscal year 2012.

The country is nearing its current debt limit of $14.3 trillion, which it is now estimated that we will reach in April. Increasing the debt ceiling will be a major issue that will be fought out in Congress over the coming weeks.

The CBO went on to say "the deficits of $1.4 trillion in 2009 and $1.3 trillion in 2010 are, when measured as a share of gross domestic product, the largest since 1945-representing 10% and 8.9% of the nation's output."

(1/17/11)- The federal government was able to lend over $41 billion to the states, as part of the $787 billion stimulus package that they used to pay unemployment insurance to its residents.

The trust funds that were used by the various states to pay the unemployment insurance had run dry as a result of the recession. They had been hoping that they would be able to repay the loans to the federal government when an improving economy would cause the unemployment rate to fall to more manageable levels.

The loans were to be for a 2-year period of time, which ended December 31, 2010. The interest that is due in September 2011 as a result of those loans amounts to about $1.3 billion.

In an article in the January 15, 2011 edition of the NY Times, entitled "Interest Adds Up to a $1.3 Billion Bill for States" by Michael Cooper and Mary Williams Walsh, the authors point out the dilemma now faced by 30 states.

According to Department of Labor statistics, California owes the biggest interest due at $362 million, with Michigan next at $117 million followed by New York at $115 million

The article goes on to state: "If states are unable to repay their outstanding federal loans by November-which will prove difficult for many- nearly half the states could be forced to effectively raise federal taxes on employers by about $21 per worker, under a provision of federal law that automatically reduces the tax credits given to businesses in states that carry loans two years in a row. Businesses in Michigan, Indiana and South Carolina are already paying the higher federal tax."

Thirty-five states were forced to raise their state unemployment taxes on employers in 2010, according to a survey by the National Association of State Workforce Agencies. The state debts are the highest they have been in the 75-year history of the nation's unemployment program.

(1/7/11)- The latest U.S.Census Bureau figures on state revenues showed that the total revenues for the 50 states came to $1.1 trillion in 2009, down from $1.6 trillion in 2008. This was the steepest drop since the bureau started keeping those records in 1951.

Tax collections fell by $66 billion, but because of the federal stimulus money it resulted in a mere 1.4% decline in general revenues. States paid $66 billion in unemployment benefits in 2009, up from the $35 billion paid the year earlier.

Public welfare spending rose 6.1% in 2009, while spending on parks and recreation fell by 4.6%. Total federal grants to the states rose by nearly 13% to $477.7 billion.

The biggest loss of revenue recorded was the $477 billion drop earned by the pension funds and other social insurance trust funds of the states.

(1/3/11)- Just as the economy as a whole is showing gradual improvement, its effect is being shown in the gradual increase in state and local tax revenues. Combined state and local tex revenues rose 5.2% to $284.3 billion in the 2010 third quarter from the year-earlier period according to the latest figures from the Census Bureau.

In the third quarter of 2009 tax revenues had fallen 5.4% from the third quarter 2008 revenues.

Personal income tax receipts rose 4.8% in the third quarter while sales-tax revenues rose 4%, according to the Census Bureau's data.

On the other side of the ledger, corporate income-tax collections fell 3.3% in the quarter. Property tax revenues rose 7.8% in te third quarter, largely due to tax rate increases that had taken place in the quarter.

The biggest problem facing both state and local governments still lie ahead, namely pension and health-care costs for their employees and retirees.

(12/28/10)- Congress has approved a $250 billion stop-gap spending measure that will keep the government running through March 4. This is the fourth stop-gap measure that has been approved since September 30th, which date is the end of the federal government's fiscal year.

The measure will keep government spending for most federal agencies and departments at levels authorized for fiscal 2010, though some programs will see slight increases. It includes a two-year wage freeze for most federal employees, and it provides emergency financing for some programs, including Pell grant scholarships that would have been reduced or eliminated for more than 400,00 low-income students.

The incoming Congress will also have to deal with the fact that the government's accumulated debt now stands at $13.9 trillion, while the debt ceiling stands at $14.3 trillion.

The measure does not contain money that the Obama administration wanted to start the enforcement of the new Dodd-Frank financial services law, and spending for the new health-care law passed this year.

Republican lawmakers have vowed to roll back federal spending to fiscal 2008 levels without increasing taxes.

The four stop-gap measures, which are known officially as continuing resolutions in and of themselves result in increased costs down the line.

(12/5/10)- In spite of all the headlines about cutbacks by state and local governments, spending is also rising by these same entities. Total spending for all state budgets for fiscal year 2011, which started July 1, 2010, rose 5.3% to $645.1 billion from 2010, according to a report issued by the National Association of State Budget Officers.

This is the first year spending rose since the fiscal year 2008. States, as a whole will still have about $43.2 billion in stimulus money to spend in their fiscal year 2011.

States are collecting more taxes as a result of rising income and sales taxes, and also because they enacted about $6.2 billion in new taxes. State tax revenues in 48 states that have reported their collections grew 3.9% in the third quarter of 2010 over the same period last year, according to a report from the Nelson A. Rockefeller Institute of Government at the State University of New York.

(11/20/10)- The lame duck session of Congress that went into session on November 15^th is faced with a deadline of December 2 in order to keep the government funded and operating. The continuing resolution that Congress passed at its last session is due to expire on that date.

None of the 12 separate appropriation bills needed to finance the government for the fiscal year that began on October 1 have been passed. Democratic leaders would prefer to package the 12 bills into one omnibus bill that would provide full-year funding for the government.

Under continuing resolution appropriation bills, the funding for any agency is restricted to the level that it was at under the previous appropriation budget bill amount.

Senior Senate appropriation aides have been compiling an omnibus bill that would total $1,108 trillion for 2011. That is the amount that Senate Minority Leader Mitch McConnell (R., Ky.) said that he would be willing to support.

This amount is about $20 billion less than what President Obama had requested in his budget. It represents a 1-% increase over the $1.089 trillion appropriated for 2010.

(10/18/10)- The Congressional Budget Office reported that the federal deficit for the fiscal year ended September 30, 2010 was slightly less than $1.3 trillion, which made it the second largest budget deficit since 1945.

That figure was only $125 billion less than the record high of $1.4 trillion set for fiscal year 2009.

The deficit in fiscal 2010 was equal to 8.9% of the U.S. gross domestic product, which is well above the long-run target of 3% that is considered by most economists to be sustainable.

(10/11/10)- Total state and local government tax revenue rose 1.7% to $318.2 billion in the three months ended in June versus the same period a year ago, according to the data released by the Census Bureau. It was the third consecutive increase in quarterly tax revenue, with growth across most major categories, including sales and property tax.

Individual income taxes grew only 0.01% to $75.9 billion in the second quarter, which was about the same amount collected in the second quarter of 2005.

Sales tax grew about 5% in the second quarter, which was about at the same level it was at in the second quarter of 2006

Property tax revenue rose 3.3% in the second quarter, compared with its fall of 2.4% in the same quarter last year.

Corporate income taxes fell 18.3% in the second quarter to $15.2 billion.

State revenue collections peaked in the 2008 fiscal year with only three states expecting to reach that level this year, according to a survey of the states by the National Conference of State Legislatures.

(9/6/10)- For the fiscal year 2009-2010 total interest paid on the debt of U.S. fixed income obligations held by the public fell 22% to $189 billion, even though the amount of debt outstanding increased 30% to $7.6 trillion, according to the latest audit by the U.S. Government Accountability Office.

(9/1/10)- According to the latest report from the Nelson A. Rockefeller Institute of Government at the State University of New York, tax revenues increased 2.2% in 47 states that have reported their receipts for the three months ended June 30, compared with the same period a year ago

This is the second quarter in a row that the revenues increased, after having decreased for 5 quarters in a row before that.

Second quarter sales-tax revenue increased 5.9% in the 47 states included in the survey, while personal income taxes grew 1.6% Corporate income taxes continued to decrease, with the decline being 19% for the quarter.

Thirty of the 37 reporting states had revenue increases for the quarter.

(8/17/10)- The House came into a one day session last week to pass the Senate appropriation bill  of $26 billion passed the prior week. The bill contained aid to school districts and to the states so that they may be able to reduce their Medicaid expenditures. The vote was 247 to 161 in favor of the legislation, which was then sent on to President Obama, who signed the bill. 

Only two Republicans crossed party lines to support the measure, while 3 Democrats opposed the bill.

(8/5/10)- New York State's legislature finally passed a budget on August 3^rd, which was 125 days late. It came close to approaching the latest passage of a budget in the state that took place on August 11^th, 2004.

Yes it is true that because of a recent change in the state's law, the legislators were not getting paid until a budget was passed, but that certainly had no affect on speeding up the process.

The vote in the state Senate in favor of passage of the budget was strictly by a party-line vote of 32 Democrats to 28 Republicans. The New York House of Representatives had passed the budget earlier, and Governor David Patterson said that he would sign it.

The budget was required by law to fill the $9.2 billion deficit that the state was running.

(8/4/10)- Now come the cities reporting in with record deficits. The city of Chicago is projecting a $654.7 million deficit in its proposed budget for 2011, the largest shortfall in the city's storied history.

The projected deficit equals nearly 20% of its proposed general-fund budget of $3.39 billion

(7/31/10)- Of the forty-one states that had budget gaps going into the 2011 fiscal year that started this month, many have been closed through a combination of budget cuts and tax increases, according to a report from the National Conference of State Legislatures (NCSL). Some states, such as New York have still not been able to pass their fiscal 2011 budgets

The good news is that for the first time in two years, state governments are expecting tax collections for the coming year to grow. The report went on to state that most states are still likely to face at least two more years of financial stress.

Many states are counting on the federal government to extend the special Medicaid payments that were part of the 2009 stimulus package. The stimulus package brought increased federal payments towards the cost for Medicaid, and many states are depending on this to continue.

Congress still has not resolved the question as to whether or not the federal government will continue to pay more for Medicaid, and thus reduce the amount that the states have to contribute towards the cost. The NCSL report estimated that it looks like the states that have announced their 2012 and 2013 budget estimates, are facing a $136.4 deficit.

(7/28/10)- Administration officials increased their estimate of the size of the federal deficit for the fiscal year that begins Oct.1, 2010 to $1.4 trillion or 9.2% of the economy.

This projection was an increase from the previous projection of $1.267 trillion in February. Over 10 years, the White House projected a total of $8.5 trillion deficit, a slight decrease from its previous estimate.

The White House estimated that unemployment would stay high, falling only to 8.1% in 2012. The new health-care law passed this year is expected to add $51 billion to the debt between now and fiscal 2012.

(7/15/10)- Maybe, just maybe it is beginning to turn!!! For the first time since the onset of the recession, states had an increase in revenues for the first quarter this year that were greater than the revenues for an equivalent period of time in the prior year.

State tax revenues rose 2.5% to $164.5 billion according to an analysis of Census Bureau data released by the Nelson A. Rockefeller Institute of Government at the State University of New York. Preliminary data for April and May from 42 states indicate that second-quarter revenue increased less than 1% according to the Institute.

The first-quarter gain was led by a 2.5% gain in personal income taxes and a 0.4% increase in sales tax. Corporate income taxes fell 0.6% from a year ago. Most of the first quarter increase came from two states, California and New York., both of which increased taxes to close budget deficits.

Census figures showed that property-tax revenue fell 0.6% to $107.7 billion in the first quarter last year. This was the first year-over-year decrease since 2008.

(6/5/10)- In a report from the National Governors Association and the National Association of State Budget Officers, it was estimated that the states face $127 billion in budget deficits over the next two years.

"States are still below pre-recession levels on everything including spending and tax collections," said Scott Patterson, executive director of NASBO.

States added $23.9 billion in taxes and fees in 2010, and governors have requested raising taxes by an additional $31 billion in 2011, according to the report.

Total.tax collections fell by one-third in Louisiana during the first quarter of this year compared with the same period last year according to an analysis of tax data from a report issued by the Nelson A. Rockefeller Institute of Government. A total of 34 states collected less in taxes during the first quarter of 2010 than for the same period of time last year.

State tax collections grew by 2.4% during the quarter when you take all the states figures together, but that was due mainly to tax increases in New York and California, rather than it being a sign of an economy that was recovering.

(6/3/10)- The state of Pennsylvania became the latest state to come up far short of revenue projections for the month of May. The state is now faced with a $1.2 billion shortfall for the budget year ending June 30^th, according to the latest figures from the Pennsylvania State Department of Revenue.

The May shortfall was for $125 million. For the first 11 months of the fiscal year, Pennsylvania has collected $24.6 billion, or 4.8% less than expected for that period as projected by Governor Edward G. Randell's $27.8 billion budget.

The state is required to have a balanced budget to start the fiscal year in July.

(5/18/10)- State tax collections are falling far short of the anticipated rebound in collections that appeared up through March of this year. April is the biggest revenue month for most states because it is when the greatest portion of the residents' income taxes are paid.

Sales tax revenues for the month have not been fully reported, but it is very doubtful that they can make up for the deficiency.

The tax revenue for April came in short of expectations by $3.6 billion; in Pennsylvania by $390.1 million; in Kansas by $65.3 million and in Idaho by $55 million.

Governor Arnold Schwarzenegger has pegged the California budget shortfall at $19.1 billion, and he has called for sharp cuts in welfare and health programs among other items to try and slash the deficit.

In Pennsylvania, the budget deficit grew from $720 million at the end of March to more than $1 billion on May 3. As we point out in our item dated 5/9/10,the Illinois deficit is now at over $13 billion.

Many states are giving thought to the idea of a tax increase, as unpopular as that might seem to the politicians proposing it.

(5/9/10)- Although the California state deficit is larger than that of Illinois, the Illinois deficit is a greater percentage of the gross revenue of the state, so that its $13 billion deficit is even more hazardous than any other state in the Union.

All states except Vermont have at least a limited requirement to balance their budgets, so that with a greatly reduced amount of federal money available from the federal stimulus package, the states and their legislatures and governors are finding themselves in quite a financial bind.

To compound the problem states are finding that their revenues for April-when most tax money comes into the states- is falling far short of what had been expected. Illinois disclosed that for April, revenue fell 15% from the same month a year ago, or $501 million, in part due to a drop of $345 million in federal aid.

As of April 30, federal non-withheld income taxes for April fell 17.6% from the same month a year ago, according to a report from the Nelson A. Rockefeller Institute of Government at the State University of New York.

(4/1/10)- The Recovery Accountability and Transparency Board consists of 13 current federal inspector generals. The board has two missions. Mission one is to discover waste, fraud and abuse in the spending of the $787 billion set up in the federal stimulus package. Mission two is to inform the American public as to how the money is being spent.

The board has an advisory panel, which is headed by Edward Tufte, a professor emeritus of political science, statistics and computer sciences at Yale University. Edward Devaney, the head of the board is the inspector general of the Interior Department.

The Web site recovery.gov has been established so that viewers can see where and how the stimulus money is being spent.

(3/19/10)- State budgetary woes are now making the headlines in the media. At last count, the states were $180 billion in the hole according to the liberal Center on Budget and Policy Priorities, and looking to Washington for some financial help.

About a third of last year's economic-stimulus package went to aid states, but now more than ever, more help is needed. About $90 billion of the stimulus money went to help the states with their costs for Medicaid, and $54 billion for schools and general services.

Illinois is about $12.8 billion in the hole, followed by California which has a shortfall of about $12.3 billion. New Jersey with $10 billion, New York with $8.2 billion, Connecticut with $4.7 billion and Florida with a $4.7 billion shortfall face the largest deficits dollar wise. Nevada with a 59.8* of fiscal year 2010 budget is the highest percentage state budget deficit.

Quarterly payments of Medicaid money are due to end in December, and states will have spent most of their education funds by June.

Realistically, only a helathy economy will be the answer that will pull the rabbit out of the hat. As much as the doomsayers are as pessimistic as ever, the stock market seems to be saying we are on the road to recovery.

(3/3/10)- The latest report from the Nelson A. Rockefeller Institute of Government points out that total state tax collections shrank in the fourth quarter of 2009 for a fifth consecutive quarter, the longest period of continuing states revenue declines since at least the Great Depression.

Lucy Dadayan, a senior policy analyst, wrote the report. In sum, state tax collections fell to $134.5 billion, a 4.1 percent drop from the $140.2 billion collected during the same period last year.

Ms. Dadayan went on to say, "State tax revenue will continue to be insufficient to support current spending commitments, and more spending cuts and tax increases are most likely on the way for many states."

Seven states reported growth in revenues, but the report notes that the gains "were often driven by legislated tax increases rather than growth in the economy and tax base."

The report predicts that more states will begin to see revenue growth soon, particularly as sales tax collections increase, as retail sales rebound.

(2/6/10)- The House voted on Thursday, to increase the debt limit to $14.3 trillion, which meant the increase was $1.9 trillion. Since the Senate has already approved the measure, it will now go to President Obama, who said he would sign it.

With this increase, the accumulated debt now amounts to about $40,000 per person in the United States. The approval vote was 217 to 212, with 37 Democrats voting against the measure along with all the Republicans in the House.

At the same time as the vote to approve the increase was taking place in the Senate, that legislative body also approved new rules that would require future spending increases or tax cuts to be paid for with either cuts to other programs or equivalent tax increases.

If the rules are broken, the White House budget office could force automatic cuts to programs like Medicare, farm subsidies and unemployment insurance. Most other programs, including Medicaid, Social Security and food stamps would be exempt from such cuts.

(2/3/10)- The Balanced Budget Act of 1997 required Congress to either offset any increase in spending for one item in the budget with a cut in spending in another item to balance it out, or an increase in taxes to negate the increased spending. That act was allowed to expire in 2002, even though there has been several attempts to reinstate that principle in one form or another.

President Obama called for a executive commission to examine ways to cut the deficit in his State of the Union message recently, since the Senate defeated a measure for such a commission to be established. The vote in the Senate was 53 to 47 in favor of the establishment of such a commission, which would have had compulsory authority to enforce its recommendations, but a super-majority vote of 60 senators in favor was required for the measure to be passed.

The commission that the president appoints must report back to him by yearend with its recommendations, which would require congressional approval before the recommendations could be enforced. The Senate would vote on the recommendations first, and if passed by at least 60 to 40, the measure would then go on to the House to be acted upon.

The Senate did pass a pay-go amendment to the increase in the debt ceiling limit to $14.3 trillion (an increase of $1.9 trillion) by a super-majority vote of 60-40 that mandated that Congress offset the cost of expansion of entitlement programs like Medicare with tax increases or spending cuts to avoid adding to the deficit.

(1/30/10)- The latest report from the Congressional Budget Office (CBO) estimated that the projected deficit for the fiscal year that ends September 30, 2010 would be $1.3 trillion. This works out to be about 9.2% of the gross domestic product.

The federal fiscal deficit for the year ended September 30, 2009 was $1.4 trillion, which was nearly 10% of the gross domestic product. The CBO estimated that interest payment for the federal government would be about $207 billion this year.President Obama's budget estimated that the deficit for the next federal fiscal year would be $1.6 trillion, which he hoped could be cut to a $800 billion deficit by fiscal year 2013.

In the face of these numbers, we can only appreciate how fortunate the federal government is that interest rates are at the extremely low levels that they are at today.

(1/24/10)- The Senate voted on a proposal to wind down the $700 billion Troubled Asset Relief Program, and at the same time voted 53-40 on an amendment to a bill to increase the debt ceiling by$1.9 trillion to $14.3 trillion.

A Senate rule requires a 60-vote majority to pass any amendment to a bill, so that the matter is still pending.

We are all aware of how difficult and contentious President Obama's attempt to reform health care in this country has been. Please keep in mind that in just seven years from now, in 2017, the Medicare hospital insurance fund will be exhausted. Looming down the road is the fact that the Social Security Trust Fund will also become exhausted a few years thereafter.

(1/6/10)- The U.S. Census Bureau reported that state and local tax revenues fell 7% in the 3^rd quarter of 2009 from a year ago. Sales taxes declined 9% to $70 billion in the third quarter compared with the year-ago period. Income taxes dropped 12% to about $58 billion.

Sales and income taxes make up roughly half of state and local tax revenues. Strangely enough property taxes increased by 3.6% in the third quarter compared with a year ago, but this revenue figure will drop off sharply as property assessments plunge and residential and commercial property values drop sharply.

All this adds up to more cutbacks by state and local governments. Interest rates are expected to rise in the coming months, and disbursements from the federal stimulus package will begin to abate. Governmental services will be sharply curtailed and even eliminated.

The only bright spot on the horizon is the fact that because of the sharp rally in the stock market since March 9, 2009 relief may ultimately be on its way. Repayments will be made to the federal government of many of the loans to financial institutions, and the economy is expected to slowly and unevenly emerge from the recession of 2008-2009.

Only three states saw increases in third quarter revenues. They were Nevada, New Hampshire and Rhode Island. Alaska saw the biggest decrease in revenues at 65%, but that was due mainly to the sharp drop in the price of oil.

(12/30/09)- The U.S. Senate approved a $626 billion Pentagon spending budget and separately approved and also sent on to the president a short-term increase in the federal debt limit. Since the House had already passed these measures, this finishes the work that the legislature had to do before they re-convene on January 19^th, 2010. The president has signed both measures into law.

The federal government's current debt limit was $12.1 trillion that is expected to be broken shortly. The $290 billion increase that passed by a vote of 60-39 will keep the government operating through February, 2010, and then Congress will have to act on the matter once again..

A bipartisan group of 31 senators sent President. Barack Obama a letter urging him to join them in backing an 18-member commission to be made up of lawmakers and two administration officials. The commission would have the power to recommend legislation to Congress to help reduce the deficit.

The defense bill, which passed 88-10, sets military spending for the remaining 10 months of fiscal 2010 the federal fiscal year. It does not include funds to pay for the extra 30,000 troops President Obama said he intends to send to Afghanistan next month

In addition, the bill postpones for two months a 21% scheduled cut in Medicare payments to doctors..

(12/14/09)- Congress has passed and sent on to the president a 1,088 page, $1.1 trillion spending bill, which covers the government's annual appropriation for fiscal year 2010. The measure combines $447 billion in operating budgets with about $650 billion in payments for federal benefit programs like Medicare and Medicaid.

The spending bill combines six of the 12 annual appropriation bills for the 2010 budget year that began Oct. 1. Obama has signed into law five others.

The final one, a $626 billion defense bill, will be used as the base bill for another catch-all package of measures that Congress must deal with in the coming days. Those include action to raise the $12.1 trillion debt ceiling and proposals to stimulate the job market

The measure provides for spending increases averaging about 10% to programs under the immediate control of Congress. This increase percentage is far in excess of the rate of inflation, and it also contains 5,244 earmarks totaling $3.9 billion, according Taxpayers for Common Sense, a watchdog group in Washington.

(10/28/09)- Under the current Medicare law, physicians are faced with a 21% cut in their scheduled Medicare fees in 2010, and then, annual cuts of 5% for the next several years. The formula traces back to Medicare laws passed in 1989 and 1997, and were aimed at keeping Medicare spending in check.

There has never been a reduction in doctor's fees as required by the law, because Congress always passed "doc fix" laws increasing the yearly fees, for fear that physicians would leave the Medicare program.

Democrats in the Senate had hoped to pass a law, separate from the health-care legislation pending before Congress, that would have called for an increase in Medicare spending to physicians of $247 billion over 10 years. The bill, S.1776,was introduced by Senator Debbie Stabenow (Dem-Mich), but was defeated by a vote of 53 to 47 in a roll call vote last week.

A dozen Democrats and one independent joined 34 Republicans in voting against the bill. The purported reason for voting against the bill was that there were no offsetting reductions in spending as against the increase of $247 billion in outlays. An attempt was made to cut the time frame to a one year increase as opposed to the 10-year time frame, but this measure was also defeated.

President Obama has gone on record as saying that his health-care proposals would add no more than $900 billion to the deficit, and any attempt to charge an expense outside the legislation is not appropriate in the eyes of fiscal conservatives.

(10/25/09)- The Treasury Department reported that the federal deficit for the fiscal year ended September 30^th 2009 came in at about $1.4 trillion, or about 10% of the U.S.'s gross domestic product. This deficit, even though it was down about 24% from earlier projections, was the largest deficit since World War II.

The Treasury said government receipts were down 16.6% in fiscal year 2009 to $2.1 trillion, whereas spending increased more than 18% to $3.5 trillion, including $113 billion in stimulus spending. The stimulus package that was passed last year called for a total of $787 billion in stimulus spending.

(10/4/09)- With time running out on September 30^th, the Senate by a 62 to 38 vote passed the stopgap measure that had been passed by the House on September 25^th, as shown by our item dated 10/1/09 below. The measure maintains federal spending at the present levels with some exceptions as stated below.

None of the needed 12 annual spending programs have been passed by Congress yet.

(10/1/09)- The House on September 25^th passed legislation to head off a government shutdown by temporarily extending spending on most federal programs at current levels. The legislation was tacked on to a $4.7 billion House-Senate compromise bill that will finance Congress' own budget.

The one-month stopgap measure, approved by a 217 to 190 vote, is needed because Congress failed to complete work on any of the 12 annual spending bills required to keep the government running.

The measure would extend financing for the operating budgets of Cabinet departments and other agencies at current levels through October 31. An exception would be made to provide more money for the Census Bureau, which is preparing for the 2010 count and for veterans medical programs.

The measure would also allow the Postal Service to delay $4 billion in payments due next month to a health care fund for retirees. About $5.4 billion is due to be paid into the Retiree Health Benefits Fund, but Postal officials say they do not have enough money to make the payment.

The measure would also extend the federal highway program for one month. Congress is working on a 3 month extension.

(9/15/09)- According to Treasury officials, the August federal deficit came in at $111.6 billion, which was slightly less than the estimated $118 billion that analysts had expected. This is the amount that receipts fell short of outlays for the month.

(9/5/09)- The Congressional Budget Office, the Congressional overseer of the budget numbers, revised its May deficit projection of $1.84 trillion for the present federal budget which ends September 30^th to $1.58 trillion. Spending will rise by 24% this fiscal year, the largest increase since 1952 when the Korean War was about to wind down.

This means that the deficit will be at 11.2% of the gross domestic product, a level not seen since 1945. It estimates that the deficit will improve only slightly in the 2010 fiscal year to $1.5 trillion.

The Obama administration's Office of Management and Budget raised its 10-year tally of deficits expected through 2019 to $9.05 trillion, nearly $2 trillion more than it projected in February, though as we all know, predicting 10 years down the road is a useless act of crystal ball gazing.

(8/2/09)- The U.S. Treasury Department announced that the government's annual deficit reached almost $1.1 trillion by the end of June 2009. The Obama administration in May estimated that the annual deficit would hit about $1.84 trillion by the end of the fiscal year on September 30, 2009.

In February, the administration had estimated that the deficit would be $1.75 trillion by fiscal yearend. The administration also revised upwards its deficit estimates for 2010 and 2011, to $1.26 trillion and $929 billion, respectively.

By historical standards, the 2009 deficit, at 13% of the country's gross domestic product, would be the biggest since the end of World War II in 1945, when it reached 21.5%.

(7/26/09)- States' tax revenues fell 11.7% in the first three months of 2009, the steepest decline on record. For the 45 states that have reported their tax collections for April and May, it has been a decline of 20% compared with the same period a year ago, according to the report from the nonprofit Nelson A. Rockefeller Institute of Government.

The recession has cut into just about every revenue source. States' collections of corporate income taxes were down 18.8% in the first quarter, compared with a year ago; personal income taxes dropped by 17.5%; and sales taxes were down by 8.3%.

State tax revenues are now down to the level that they were in 2005.

(6/29/09)- State-income tax revenue fell by 26% in the first four months of 2009, compared to 2008 according to a survey of states by the nonprofit Nelson A. Rockefeller Institute of Government. The public-policy research arm of the State University of New York conducted the report.

Withholding tax for the first four months was down 6.9% from the same period last year. Only Utah, Alabama and North Dakota posted gains, while Arizona, South Carolina, Michigan, California and Vermont led the decline.

Personal-income tax collections were down by $28.8 billion for the first 4 months of 2009 compared to 2008 for 37 states included in the survey. Nine states do not collect broad-based personal income taxes, while the results for the other states were not available.

(6/9/09)- States face an aggregate budget deficit of at least $230 billion according to the latest estimate from the National Association of State Budget Officers. For most states, that covers the period from July 1, 2008 to June 30, 2011.

That deficit estimate figure is nearly double the $130 billion in federal stimulus funds that states can use flexibly over that 3-year period of time. About $120 billion in further stimulus funding comes with stricter requirements, and sometimes with new costly mandates.

About a quarter of the states saw their economies contract last year, according to the U.S. Commerce Department, and it will be worse this year. Social Security will continue to see its deficit grow, since with the growth in unemployment, less revenue will be coming into the system.

(5/15/09)- The federal deficit is running at $956.8 billion for the first 6 months of the fiscal year that began October 1, 2008, which is nearly 1/7^th of GDP according to Wrightson ICAP, a research firm. The Treasury will have to borrow about $2 trillion for the fiscal year.

All this borrowing will mean that the Congressionally mandated debt ceiling of $12.1 trillion will be breached in September. Tax revenues have dropped by 14% in the first half of the fiscal year.

The Congressional Budget Office expects interest payments alone on the federal debt to more than quadruple in the next decade to $806 billion in 2019 from $172 billion in 2009r.

(5/8/09)- Congress has passed a $3.5 trillion budget outline for 2010, that includes $530 billion in basic spending for domestic programs. President Obama released a more detailed budget plan on, May 6 that we will add on to this article when available..

The House approved the budget outline by a 233-193 vote, with no Republicans voting for it, and 17 Democrats voting against it. The Senate vote was 53-43 with four Democrats voting against it, including Sen. Arlen Specter of Pennsylvania who recently switched to the Democratic side of the aisle

The Democrats feel that under their budget outline, the budget deficit would fall to$523 billion, or 3% of GDP by 2014.

The U.S. Treasury Department reported that the deficit for the first half of the government's fiscal year for 2009 was $956.80 billion.. For the fiscal year 2008, which ended September 30, 2008, the total deficit was $454.80 billion.

The Congressional Budget Office (CBO) estimates that the deficit for the 2009 fiscal year ending September 30, 2009 will be at about $1.8 trillion, or 12.5% of the Gross Domestic Product (GDP). The components of the GDP are consumption; government spending; net exports; and capital investments.

Many economists are fearful that the huge stimulus programs initiated by the Obama administration will put this country at such unbelievably high deficit levels, that it will mean our grandchildren's grandchildren will be faced with financial crises for the rest of their lives. We at therubins on the other hand believe, that this massive stimulus spending that is going on right now is the only way to bring us out of this dire economic situation that we face now, and will result ultimately in big profits for the government down the road.

(3/18/09)- By a vote of 62-35, the Senate passed and sent on to President Barack Obama a $410 billion spending bill that will fund the government for the balance of the federal fiscal year which ends on September 30, 2009. The government has operated on a temporary-spending budget, which has been extended for various periods of time since the last budget expired on September 30, 2008.

Eight Republicans supported the measure, thus enabling the bill to finally pass. The president signed the bill, even though he objected to some of the items in the budget bill. The new budget represented an 8% increase over last year, and included some new items, such as spending on the war in Iraq and Afganistan, which were taken as "off budget" items in the previous administration's budget.

The bill contains an increase of $335 million for the FDA, which is hoped will help that agency deal with the many problems that have come to the forefront in the last few years.

(7/24/08)- The House passed and sent on to the Senate the bill that would allow the government to extend aid to Fannie Mae and Freddie Mac that we discussed in our item. The measure now goes before the Senate, and if passed by that legislative body will be signed by the president, who is no longer threatening to veto the legislation. The measure also contains a provision for the federal government to extend aid for homeowners faced with mortgage foreclosure.

(7/23/08)- As this country's economy continues to struggle, Congress and President George W. Bush have legislation pending that deals with whether or not the federal government should help Fannie Mae and Freddie Mac, the two major mortgage dealers who are presently in crisis mode. Combined, these two companies hold over $5 trillion in mortgages that could be endangered if they fail.

Almost all major U.S. financial institutions own debt obligations of one or both of these companies. Neither or them is an actual federal agency, although they have been frequently called "quasi" governmental agencies.

There is pending legislation before both the House and the Senate that deal with how to assist these companies while they are in this present crisis situation. Both Henry Paulson, Secretary of the Treasury and Ben Bernanke, head of the Federal Reserve Board favor legislation that would help both Fannie and Freddie on the near term.

The Congressional Budget Office, an independent office of Congress, estimates that the rescue package can cost anywhere from zero to over $300 billion dollars. Strict fiscal conservatives want to set a figure for the cost because under the Balance Budget Act of 1997, Congress must offset any increased budgetary spending by either cutting an equal amount of spending, or increasing taxes to match the increased amount to be spent under new legislation.

Even though we at therubins favor fiscal restraint there are times when we have to look at the pluses and minuses of each situation before strictly interpreting the Balanced Budget Act. We will attempt to look into the crystal ball and give our educated determination as to what Congress will do to help these two companies.

We think that the House will pass the legislation today that will enable the U.S. Treasury to take control of the situation for the next 12 months (not 18 months as requested by Secretary Paulson) in order to help Feddie and Frannie in whatever way they need the help. Included in their version of the bill, there will be a provision to help individuals who have defaulted on their mortgages or are close to doing same to the extent of a $2 billion package (not $4 billion as many of the Democrats are now asking for). The Senate will go along with the House measure on either Thursday or Friday.

Even though the president will threaten to veto the message, he will accept it for the good of the economy, and not veto it. The pay-as-you-go requirement of the Balanced Budget Act will not be adhered to, just as it is not being adhered to in connection with any other national emergency legislation.

(8/4/99)- We will continue to update this article whenever significant developments warrant it. It may mean that this article will become very lengthy, but we feel it is important that all the developments be written about in one place, so that you may be better able to understand the complexity of the issue. Of course you can always say lets abandon the Balanced Budget Act of 1997 and go back to our old ways. So what if we go into deficit spending. That way everybody can have whatever moneys they need, because the expenditure is necessary and for a very good cause. We will present the facts; you make your own decisions.

At the end of this article we discuss the fact that the CBO is now projecting a non-Social Security budget surplus. Congress is due to adjourn on August 6 and so far no budget for fiscal year 2000 has been passed. The original Republican plan called for an allocation of $270 billion for the military and $268 billion for all other spending. This is the amount that remains unallocated of the $1.75 trillion budget after payment for mandatory programs and spending. The Defense Department was to receive $19 billion more than it did for the fiscal year 1999, while domestic spending was to be cut $26 billion from the amount it received in the fiscal year 1999.

According to John Feeherty, a senior aide for Speaker J. Dennis Hastert, " we're going to trim off some of the allocations for Defense, Treasury, the legislative branch, and feed some of that back". The exact details of the changes proposed have not been released, but we will advise you of it as soon as it is released.

On January 25th, 1999 the U.S. Supreme Court, in a 5-4 vote, ruled that the Census Bureau could not use statistical sampling to determine the population counts for purposes of allocating seats in the House of Representatives among the states. This ruling is now coming back to further demonstrate the difficulty in maintaining a balanced budget. On Tuesday, June 1,1999 Jacob J. Lew, Director of the Office Management and Budget wrote to the Congressional leaders of the House and Senate appropriations committees to advise them that an additional $1.72 billion would be needed to conduct the year 2000 census. Incidentally, this would bring the cost of the year 2000 census to $6.99 billion up from the $2.6 billion spent on the 1990 census.

The increased estimate is 60% more than the administration had budgeted for the task. The Senate Appropriation Committee has allocated $32.2 billion in budget authority for the bill that includes the census, which is already $300 million less than appropriated for the current year. The House Appropriations Committee has allocated $30.5 billion, so it is already at a lower figure than is the Senate.

If the $1.72 billion is allocated we then have to contend with the Balanced Budget Act of 1997 because we then will need $1.72 billion taken from somewhere else to offset this increase. Where will this offset come from?

If you had a 13% mortgage and could refinance it for 6% wouldn't you want to refinance it at the lower rate? This strangely as it may sound shows you how complex the issue is, in connection with preserving the Social Security surplus for the Social Security system. An article written by David Wessel in the Wall Street Journal edition of June1, 1999 entitled " Treasury Edges Toward Bond Buybacks" delves into this issue.

In one of the latter paragraphs of this article we pointed out the fact that the Government has reduced sharply the amount of bonds, bills and notes that they have issued, since our debt has been reduced substantially by our surplus. In the last quarter alone the amount of debt held has been reduced by $116 billion. With the lower amount of borrowing, and therefore the lower the supply available, interest rates had fallen until very recently. Since March 1997 the amount of marketable government securities in private hands has fallen by $300 billion.

Now the U.S. Government has a great deal of high interest bonds outstanding, which were issued in the days of higher interest rates of the 1970s, 1980s and early 1990s. These bonds are non-callable meaning that you can not be forced to surrender these bonds before maturity. There is a procedure called a reverse auction that may be invoked to induce the bondholders to voluntarily surrender their bonds. It is called a reverse auction because the government would be buying the bonds from the holders instead of the normal auction procedure wherein the government issues the bonds. In order to induce the bondholders to surrender their bonds the government would have to offer the holders some inducement to accomplish this. This is called offering a premium to induce the surrender. Federal auditors would classify this premium as an extra interest expense immediately and thus the size of the surplus would be reduced by this amount. This procedure would involve billions of dollars to have a meaningful impact and yet that would mean that less of a surplus would be available to be used to balance the budget. No offset would be required in this situation unlike some of the required offsets under the Balanced Budget Act of 1997. Future predictions of surpluses would be increased because of the interest savings.

The Treasury will put the issue before the White House National Economic Council before issuing any of the required regulations in connection with this matter. Again we take no sides in this issue, but feel that bringing this matter to your attention will further help you at arriving at your own decision.

We continue to add paragraphs to this article because of the newsworthiness of the evolving issues that are becoming more and more complicated. Because of the divergent issues involved herein, we may face another governmental shut down because of these budgetary complications. Emergency and/or temporary spending bills may be needed once again to keep the government running.

The House of Representatives recessed on Thursday, May 28, 1999 without passing the $288.8 billion defense authorization bill. The night before the Senate had passed its version of the bill by a huge 92-3 majority. Some Republicans want to add $8.3 billion to President Clinton's defense request, but others are opposed to it. Complicating matters is the fact that the House bill, as drafted by the House Armed Service Committee, would bar use of the money for the war. It would require President Clinton to come back to Congress for additional funding approval for actions in connection with the war after September 30th. Speaker Dennis Hastert tried to have this restriction eliminated from the bill but conservative Republicans opposed to the war blocked his efforts. You must also remember that under the Balanced Budget Act of 1997 if spending is increased in one area, compensating cuts must be made in other areas. If you add to defense spending you may be negatively impacting the solvency of Social Security by utilizing some of its surplus as the offset.

With each passing day it is becoming more and more obvious that the budgetary conflict between Security and Social Security is widening instead of narrowing. On May 26th, 1999 the U.S.Senate, by a vote of 60-40, rejected the Administrations request to close down more military bases. Secretary of Defense William S. Cohen and the Pentagon estimated that $2-3 billion could be saved through base closings with no appreciable impact on our military preparedness. The General Accounting Office had agreed with this estimate. Sen. John McCain (Rep.-Ariz.), Sen. Charles S. Robb (Dem.-Va.) and Sen. Carl Levin (Dem.-Mich.) had introduced the base closing legislation. With the spending caps in place from the 1997 Balanced Budget Act it is beginning to look like we may have a budgetary impasse once again. The shortfall is almost $30 billion and Social Security and Medicare look like the cash cow that will be used to make up the deficit under the caps.

As the budgetary process continues to evolve we are now seeing another promise that was made by many of our Congress people fall by the wayside. In the latter part of this article we articulate how the promise to not touch Social Security and Medicare funds, while at the same time preserving and enhancing the solvency of these systems, is being broken. It now looks like the promise of no new taxes will also be broken. Instead of calling it a "tax" they are calling it a "fee".

To make up for the increases in military spending the Senate Appropriations Committee is calling for spending for the Federal Aviation Administration operations to be limited to $5.75 billion, or almost $300 million less than requested under the president's budget request. To make up about $200 million of the loss the FAA would be permitted to impose new fees on air carriers to pay for the agency's costs in operating the air-traffic-control system for trans-oceanic flights. Guess who in turn will pay for these new "fees"?

In addition the Army Corps of Engineers construction spending would be cut by over $300 million from current levels. This will result in some serious cutbacks to several water projects out West. Over $90 million would be cut from projects to protect the ecosystem in Florida, California and the Pacific Northwest.

In the Energy Department funding, about $600 million more will be allocated to the military portion, while taking away that same amount from the non-military portion thereof.

"Weapons Makers Seek Rise in Pentagon Spending " is the title of an interesting article in the N.Y.Times issue of Wednesday, May 19, 1999 written by Leslie Wayne. The main reason we began this site was our " hope that as a result of reading these articles you will be able to make a more informed decision about the problems associated with the elderly". We are not attempting herein to affect your beliefs about the current war going on in Yugoslavia, nor how we should deal with the tyrant President Slobodan Milosevic. The horrible genocide taking place there is certainly being fully covered by your local and national media. The purpose of this article however is to explain the ramifications that increased spending for defense and security will have on the Social Security System. Once you understand the ramifications, it is up to you to make your own decisions on this matter.

The Balanced Budget Act of 1997 mandates that there can be no increased spending in the budget without having a balancing cut therein, so that the budget must remain in balance. It was just a few years ago that the U.S. Government was operating at an almost $300 billion deficit. The U.S. Government is by far and away the largest borrower in the credit market. As the largest borrower the government was creating the most demand. As we got into deeper and deeper debt the lenders would ask for higher and higher interest rates to be paid to compensate them for our weakening credit status. If you lent money to someone deeply in debt you either require more security or a higher interest rate. It had reached the point wherein for each dollar the government raised in revenue, almost 30 cents had to be paid to cover the interest service being paid on the debt. Thus only 70 cents was left for operating the government.

There are two basic reasons why interest rates have been dropping over the last few years. The combination of low inflation and less borrowing by the U.S. Government are the driving forces behind this lower interest rate environment. Although the Federal Reserve Board has just indicated a bias towards higher interest rates we must wait to see how this will play out for itself. Ask the average stock market investor how he has enjoyed this low interest rate environment and he will surely smile.

We will now come back to the core of our problem caused by the potential conflict that arises from increasing spending for the military and helping insure the solvency of the Social Security System. Military spending has decreased by about 70% since the late 1980s. Many people have felt that the combination of base closings and cutbacks to the military have weakened the military power of the United States much more than was necessary. Thus the Administration of President Clinton requested $112 billion in additional military spending over the next 5 years. Weapons procurement would be increased from $44 billion in 1998 to $53 billion in 2000 and $60 billion in the year 2001. Now mind you, these proposals were announced even before the war in Kosovo and Yugoslavia. Much of the armaments that have been used will have to be replaced. New generations of weapons and planes are more expensive than ever. As of the latest figures about 240,000 barrels of jet fuel and oil products are being consumed daily by the war effort. Incidentally this is one of the reason why we have seen an increase in the cost of gasoline. Cutbacks in production by producing nations are the other cause for the increase in price. Congress is presently working on a $14.7 billion emergency spending bill, part of which is to cover the cost of the Yugoslavian campaign. This matter is covered in our article The Accurate Numbers as To Social Security and Medicare Solvency. In updating this article it is now expected that the CBO will show a non-Social Security surplus of about $20 billion for 2000, which is expected to grow to a surplus of $100 billion by the year 2005. According to strict private practice accounting this money should not be used in arriving at a budget surplus The healthier economy of the last 2 years alone has resulted in the increased estimates for the solvency of Social Security from the year 2029 to the year 2034. The estimate for Medicare has been increased from the year 2001 to the year 2015. Now let us suppose that interest rates rise because of additional borrowing done to pay for the increased military spending. This of course assumes that Congress finds a loophole to get around the Balanced Budget Act of 1997. Will that not mean that the economy will weaken, and that the actuaries will than have to shorten the solvency estimates for Medicare and Social Security? Then of course there is the other possibility of borrowing from the Social Security Trust Fund. Another possibility would be to cut back on Social Security and Medicare spending and use the additional money for military spending.

We are not even attempting to answer this very difficult question in this article. It is our hope however that in reading this article you can make a more informed decision on this matter.

FOR AN INFORMATIVE AND PERSONAL ARTICLE ON PRACTICAL SUGGESTIONS WHEN SELECTING A NURSING HOME SEE OUR ARTICLE "How to Select a Nursing Home"

By Allan Rubin
updated January 30, 2012

http://www.therubins.com

To e-mail: hrubin12@nyc.rr.com or rubin@brainlink.com

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