Congress's "power of the purse"

Following the signing of our future away by the 111th Congress, you may have noticed the DOW drop. Now at 2:08 CST, it is still down 356, at 7915.

Toxic billing, toxic government, toxic administration and its defiant attitude, "I won, get over it!"

From Wikileaks a report from the United States Congressional Research Service for members and committees of Congress states:

The federal budget implements Congress's "power of the purse" by expressing funding priorities through outlay allocations and revenue collections. Over the past decade, federal spending has accounted for approximately a fifth of the economy (as measured by gross domestic product--GDP) and federal revenues have ranged between just over a fifth and just under a sixth of GDP.

In FY2008, the U.S. government collected $2.5 trillion in revenue and spent almost $3.0 trillion. Outlays as a proportion of GDP rose from 18.4% in FY2000 to 20.9% of GDP in FY2008. Federal revenues as a proportion of GDP reached a post-WWII peak of 20.9% in FY2000 and then fell to 16.3% of GDP in FY2004 before rising slightly to 17.7% of GDP in FY2008.

The budget also affects, and is affected by, the national economy as a whole. Given recent turmoil in the economy and financial markets, the current economic climate poses a major challenge to policymakers shaping the FY2009 and FY2010 federal budgets. Federal spending tied to means-tested social programs has been increasing due to rising unemployment, while federal revenues will likely fall as individuals' incomes drop and corporate profits sink. As a result, federal deficits over the next few years will likely be high relative to historic norms.

In addition to funding existing programs in a challenging economic climate, the government has undertaken significant financial interventions in an attempt to alleviate economic recession. The ultimate costs of federal responses to this turmoil will depend on how quickly the economy recovers, how well firms with federal credit guarantees weather future financial shocks, and whether or not the government receives positive returns on its asset purchases. Estimating how much these responses will cost is difficult, both for conceptual and operational reasons.

Despite these budgetary challenges, many economists believe that fiscal policy (i.e., federal borrowing and spending) would be the most effective macroeconomic tool under current conditions. Past fiscal stimulus measures, which are being considered as possible options for 2009, have included extensions to unemployment benefits, aid to state and local governments, tax rebates, and expanded infrastructure spending.

Federal loans or loan guarantee programs may help provide liquidity to distressed financial markets and stimulate economic activity, but may also expose the federal government to substantial credit risks.

While many economists concur on the need for short-term fiscal stimulus, widespread concerns remain about the long-term fiscal situation of the federal government. The rising costs of federal health care programs and Baby Boomer retirements present serious challenges to fiscal stability.

Operating these programs in their current form may pass on substantial economic burdens to future generations.

NO sh*t Sherlock!

At the end of post DOW down 405, well Mr. Prez, looks like your henchmen, s'cuse me, Congressmen, know how to restore faith in the economy!