In February, the nonpartisan Congressional Budget Office predicted that this year’s deficit would fall to $845 billion, down from nearly $1.1 trillion in 2012. Goldman Sachs recently predicted that the deficit would fall even further, to $775 billion, and return to sustainable levels within two years.
As a result, the national debt is rising far more slowly than in the frantic days after the 2008 economic crisis: The Treasury Department actually expects to repay a tiny sliver of the $16.8 trillion national debt by the end of June.
Much of the improvement stems from recent budget deals. Over the past two years, Congress has capped agency spending and created the sequester, which is trimming outlays on domestic programs and the military. Lawmakers also agreed to raise taxes on virtually every American this year, letting a temporary reduction in the payroll tax expire and tax rates rise for households earning more than $450,000 a year.
But other factors are at work, too. Defense spending has been declining rapidly with the end of the war in Iraq and the ongoing drawdown of forces in Afghanistan. A surprising — and apparently durable — slowdown in health-care costs has sharply reduced projected spending on Medicare and Medicaid. And the falling jobless rate and improving economy have helped push federal tax collections up 16 percent over last year, according to figures out Tuesday.
This will have interesting implications for budget talks, but also should start instilling some confidence with business leaders, which hopefully then fuels even more economic growth.
The fracking revolution is having a ripple effect throughout the U.S. economy. That applies to both the natural gas boom in states like Ohio and the oil gas boom in North Dakota. BusinessWeek notes the impact the oil boom is having on local banks.
In his office on the second floor of a glass-encased building on North Main Street in Watford City, N.D., Stephen Stenehjem rolls out a map of a proposed multimillion-dollar residential development and shakes his head in disbelief. “My dad would have been very pleased,” says Stenehjem, a third-generation banker and the chief executive officer of First International Bank & Trust. “For 25 years, our focus as a community bank was to help keep our small town alive. So it has been really fun to see this oil come back.”
Once a depressed town of 1,700 in what was America’s least-visited state, Watford City and its neighbors are at the center of North Dakota’s oil and gas boom. While about 470 banks across the U.S. have folded in the past five years, those serving America’s new fracking economy have seen explosive growth. Oilfield workers carrying paychecks, investors looking to build, and farmers enjoying mineral-rights payments are pouring money into banks. First International, with $1.3 billion in assets and 21 branches in North Dakota, Arizona, and Minnesota, hired 65 employees over the past year, including lenders, trust officers, and insurance agents, and plans to add 30 more this year. “It’s fun to be a banker in North Dakota,” Stenehjem says. “Even six or seven years ago, if there was a new pole barn going up in the county, I knew about it. Now I can’t keep track of everything.”
The implications for the U.S. economy are staggering. It’s great to hear good news and we’ll be following this story.
Walmart has a reputation of being one of the best run companies in the world, but that reputation may be in jeopardy. This article details how Walmart’s obsession with cost-cutting and reducing employee headcount is destroying the customer experience. The company literally doesn’t have enough employees to get products loaded onto the shelves. Product is sitting in storage at the stores while customers can’t find that product on the shelves.
Walmart may be the poster child of companies that have been obsessed with cost-cutting since the recession began. It’s a tough balance, but perhaps some executives will read this an realize that sufficient investment in employees is critical for success.
He loses credibility in my opinion when he discusses how we could have used bankruptcy through the crisis, and then he also goes back to the gold standard.
This is good news for those of us who believe that immigration reform can provide much-needed certainly for the US economy and provide a real boost.
Labor and business representatives have met for the last several months to find a way to create a legal system for bringing foreign workers into the country for low-wage jobs such as restaurant and home-care work. That would greatly reduce the incentive for illegal immigration, supporters argue.
Under the new proposal, companies that could not find U.S. workers would be allowed to hire foreign workers. Those workers would enter the country under a newly created program of immigrant worker visas. Companies would have to advertise jobs to Americans first.
The agreement calls for creating a federal expert bureau that would make recommendations on the number of foreign workers allowed into the country each year. The recommendations would be based on unemployment data and other information about labor market conditions in particular industries.
The agreement involves a trade-off. For the first time, the AFL-CIO agreed to support establishing a temporary guest-worker program for low-skilled labor.
The Chamber of Commerce agreed that the number of workers admitted under the new visa would expand and contract with the economy. In addition, the visa would not tie a worker to a particular employer, a step designed to protect workers from the threat that they could be deported if they had a dispute with their boss. Workers would also receive protections on wages and working conditions. At least some of the temporary workers would be allowed to eventually apply for green cards, which would give them lawful permanent residence.
The chamber also signed on to a long-standing labor demand that an independent entity – the new expert bureau – have the authority to study labor data and recommend curtailing work visas when unemployment is high. The bureau would have “political independence analogous to the Bureau of Labor Statistics,” said to a joint statement released Thursday by AFL-CIO President Richard Trumka and U.S. Chamber of Commerce head Thomas J. Donohue.
The bureau would make recommendations, but it would then be up to Congress to set visa numbers, as it does now.
This is something we don’t see much in Washington – real compromise. Perhaps the Republicans in Congress will now change their tune a bit if the Chamber gets behind reform.
Be careful before taking out huge loans to get a degree from a for-profit college. Make sure you're not getting suckered into for-profit college scams that leave you with no job and huge debt.
