CBO Baseline Budget Outlook

The new projected Budget Outlook is out through 2022 and it makes for a good laugh.  Keep in mind this is the baseline scenario.  In 2012 the Budget Deficit is forecast to be just over 1 Trillion Dollars.  However for 2013 it's forecast to drop by nearly 50% to only 585 Billion Dollars.  I highly doubt that is going to happen unless Taxes are raised substantially and Government Spending is reduced significantly. 

Notice the CBO is projecting Revenue Growth near 10% in 2012 and over 18% in 2013.  The US has not seen an Annual Revenue increase greater than 18% since the late 1970's.

New Debt Limit

The new Debt Limit is now set at 16,394,000,000,000 trillion dollars.  As of 1/30/12 the total Debt Outstanding is now at 15,252,831,000,000 so we are only about 1.14 Trillion away from the new Debt Ceiling.  My guess is this new limit will be reached before the end of the year with a big fight coming in 2013 as to whether it should be raised again or not.

Weekend Stock Market Analysis for January 28, 2012

The latest Weekend Stock Market Analysis provided by Amateur Investors is at
http://www.amateur-investor.net/Weekend_Market_Analysis_Jan_28_2012.htm

No more Elections for Congress

I believe in the future those that serve in the House and Senate should come from the common people with no more elections held.  US Citizens should be chosen similar to what occurs for Jury Duty.  This would mean a 2 year stint for the House and a 4 Year stint for the Senate.  Once you have served in either the House or Senate then you will no longer be chosen in the future.

Here are a few qualifications that I would use.

1.  You have to be a registered voter.
2.  You will have to pass a competency test which involves the US Constitution.
3.  Waivers will be given for those with a hardship.
4.   Each individual will be compensated for their service based on the average annual salary of a House or Senate Member.
5.  Living Quarters will be provided as well. 
6.  No person would lose their job if they had to serve.

How the Federal Reserve is affecting Federal Employees

Most Federal Employees are now covered by FERS as the number of employees covered by the old retirement system is rapidly decreasing.   Since a significant part of FERS involves the TSP many investors have their money in the G Fund.   The G Fund is tied to the 90 Day TBILL and as you can see in the chart below both have been trending lower for the last several years.  In the late 1980's the G Fund was returning close to 9% but has now fallen down to 2.45% in 2011. 

Meanwhile the return on the 90 Day TBILL is basically "0%".  On the positive side with the 90 Day TBILL returning near 0% that means the G Fund probably has reached rock bottom.  However on Wednesday the Federal Reserve said they are going to keep Interest Rates near current levels through at least 2014.  What that means for Federal Employees is that the returns in the G Fund will remain extremely low and may remain under 3% for the next 3 years (2012, 2013 and 2014).   At this point you really have to question the policies of the Federal Reserve by keeping rates at an extremely low level for another 3 years which is basically screwing Federal Employees who keep their money in the G Fund.      

Weekend Stock Market Analysis

Here is the latest Weekend Stock Market Analysis provided by Amateur Investors at
http://www.amateur-investor.net/Weekend_Market_Analysis_Jan_21_2012.htm

Will the Unemployment Rate rise in 2012?

As mentioned yesterday the there was a decrease in the Individual Tax Receipts for December as compared to a year ago.  Since 1998 when this has happened there was a spike upward in the Unemployment Rate the following year (points A to B) except in 2003 when it decreased slightly.  This it will be interesting to see if the Unemployment Rate will begin to reverse back to the upside in the months ahead.