government budget deficit

Budget Fight Preview

The President's budget proposal will not be released until February 14, 2011, yet the leaks and politics are spewing into the Internet beltway.

The budget proposal will recommend ending Bush-era tax cuts for the highest earners when they are set to expire at the end of 2012, though the White House didn't include the projected revenue from this in its budget forecasts. The budget projections are based on the administration's economic forecast which shows a recovering economy, but it was made before the December tax-cut compromise which, most private forecasters say, has boosted the near-term growth outlook. Faster growth could mean higher government tax revenues and a smaller deficit.

Many of the spending cuts or reductions in the budget are already known. It would, for example, freeze levels of domestic non-defense spending for five years, something the White House believes will save $400 billion.

The White House will also propose reductions to a number of federal programs, from the U.S. Forest Service to a program that provides heating assistance for low-income families. It will adopt previously recommended reductions in military spending that would reduce costs by $78 billion over several years. The budget proposal will also recommend targeted spending increases, particularly in education and infrastructure programs.

We have a cut off for heat to the poor, charging interest on student loans while that person is still in school, a comment that maybe we should tax the rich, after just giving the rich a massive tax break.

UK proposes a garage sale, needs the money

The news in the UK reporting that 10 Downing Street is planning on selling "non-core" government assets to make up for a budget shortfall.  Currently, the Brown government is running a budget deficit and is struggling to find ways to meet that difference between revenues and outlays. The sale also was to meet the rising demand to deal with their debt.  One way, the government proposed today, was the sale of assets ranging from stakes in businesses to looking at it's real estate portfolio that was valued at £220 billion .

This also comes into play with a concerted effort to reduce government spending.  I cannot help but think that what we're seeing in the United Kingdom is a future mirror of what will happen here. 

The plan is to sell a "portfolio of non-financial assets" held by Whitehall and local authorities over the next two years.