Projected Federal Spending

The recent Congressional Budget Office report raised alarm and apprehension among economicsts and general public. The forecasts break down the spending figures for 2020:

Medicare and Medicaid: 28%

Defense: 15%

Net Interest: 14%

Social Security: 22%

Other Spending: 21%

Home Mortgage Relief: Plan B

Obama administration on March 26, 2010 announced the Plan B of the home mortgage relief. The plan would cost approximately $50b from the TARP fund. The plan includes three main components:

(1) Assistance to unemployed homeowners through mortgage companies;

(2) Encouraging mortgage service providers to write off a portion of borrowers' loans to a more manageable levels. Borrowers who owe 115% or more of the value of the home and are paying more than 31% of their monthly income toward house payment are eligible.

(3) Prodding the lenders to cut the debt of borrowers whose houses are "under water".

Jobs Bill

President Barack Obama on March 18, 2010 signed a landmark jobs bill that includes $18b in tax breaks and $20b in new transportation funding. The tax break component of the measure includes waiver of 6.2% Social Security Tax through December 2010 if the businesses hire anyone unemployed for at least 60 days and giving $1,000 to employers if the new hire stays on job for a full year. The measure also extends tax credits for businesses to buy new equipment.

Treasury Holdings: China Still Number 1

Since China has overtaken Japan in September 2008, it has maintained top spot of holding U.S. debt every month as of January 2010. However, both China and Japan are offloading trasury securities at a steady clip over the past few months. China as of January 2010 held $889 billion of U.S. debt.

Laudable Effort

Obama administration's twin goals of doubling the exports in five years and investing 3% of GDP every year in R&D are praiseworthy. It is to be seen how it gets executed.

Economic Stimulus' Price Tag Costlier

The price tag for the economic stimulus package increased almost 10% from the original figure of $787 billion to $862 billion, according to the latest estimate from the Congressional Budget Office.

Latest Estimate (November 6, 2010) is $814b.

Fed Action Indicates Economic Stability

Federal Reserves during its August 11-12 Open Market Committee meeting decided to wrap up its program to buy back $300 b worth of Treasury Securities by the end of October. The action foretells Fed's increasing confidence in the belief that economy might have bottomed out. However, Fed is not halting an ongoing program to buy back $1.25 trillion worth of mortgage-backed securities.