EconomicCrisis.US

The costs of solving the federal deficit problem are more than many people want to pay – higher taxes on a wide swath of Americans and cuts in benefit programs that reach into millions of homes.

But the results of inaction on the steadily growing debt threat are even more costly: fundamental damage to the U.S. economy and a lower standard of living for future generations.

The warnings from deficit hawks are much more urgent since the nation’s fiscal health went from bad several years ago to drastically worse with the financial crisis and recession of 2008 and 2009. Last year, the government borrowed $1.4 trillion, nearly 40 cents of every dollar it spent.
Read the rest of this entry »

The financial crisis and recession cost U.S. households an average of about $100,000 in lost wealth and income, according to a study by former Treasury Department economist Phillip Swagel.

From June 2008 through March 2009, households’ stock holdings fell $66,000 and real estate dropped $30,000, according to the study released today by the Pew Economic Policy Group. Each household also lost an average $5,800 from unemployment and lower earnings from September 2008 through December 2009, the study said.

While stocks have rebounded this year, the fallout from the crisis was broader than the price of the government’s $700 billion bank rescue or $787 billion economic stimulus package, the study said. Swagel said the losses probably won’t be recouped until 2011 at the earliest.
Read the rest of this entry »

The U.S. Senate was expected to cast a key test vote on Monday on legislation, proposed by Democrats and backed by President Barack Obama, to tighten the regulatory screws on banks and markets after the financial crisis.

The bill was seen as likely to fail the test vote, then to come back later, possibly within days, in a modified bipartisan version that analysts said probably will win final passage.

If approved, it would have to be merged with a bill backed by the House of Representatives in December. Then a final version could be sent to Obama, who would sign it into law.
Read the rest of this entry »

Failure to achieve a “major restructuring” of the U.S. Postal Service “will increase the risk that taxpayers and the U.S. Treasury will have to provide financial relief,” says a recent report from the Government Accountability Office.

“USPS is facing a major financial crisis,” projecting a record loss of over $7 billion in fiscal year 2010, says the April 22 GAO report. Moreover, without cost-cutting and revenue-raising measures, “USPS expects financial losses will escalate over the next decade.”

In July 2009, the GAO listed the USPS’ financial condition as “high-risk” and said immediate attention was needed to improve its financial viability.
Read the rest of this entry »