SPRINGFIELD, Mass. (WWLP) – The payroll tax hike that took effect as a result of the fiscal cliff is taking a toll on many Americans’ household budgets.
That change in federal tax law means people are taking home smaller paychecks, and that’s forcing nearly 75% of Americans to cut back on spending, according to theNational Retail Federation .
The sequester: steep spending cuts coming
WSJ’s Damian Paletta says the sequester cuts – including painful slashing of defense spending – now seem inevitable. The question now is how long they’ll last. WSJ’s David Wessel explains the hit to federal employees and when furloughs could kick in….
Four economists, including a former Federal Reserve governor who has co-written research with Chairman Ben S. Bernanke, warned that losses from the central bank’s more than $3 trillion balance sheet could lead to the Fed losing control of monetary policy.
“The combination of a massively expanded central bank balance sheet and an unsustainable public debt trajectory is a mix that has the potential to substantially reduce the flexibility of monetary policy,” the economists write. “This mix could induce a bias toward slower exit or easier policy, and be seen as the first step toward fiscal dominance. It could thereby be the cause of longer-term inflation expectations and raise the risk of inflation overall.”
The conclusion from economists, including Frederic Mishkin, a governor at the central bank from 2006 to 2008 and an academic collaborator with Bernanke before that, will be presented at the U.S. Monetary Policy Forum in New York. Their paper serves as a high-profile warning to an audience including Boston Fed President Eric Rosengren, Fed Governor Jerome Powell and St. Louis Fed President James Bullard.
‘The second the Fed enters open deleveraging mode, everyone will sell everything they can to lock in the profits generated from the past 4+ years of Fed balance sheet expansion.
Furthermore, at that moment, the market will begin pricing in the unwind of some or all of the $15 trillion in central bank liquidity which is the only reason the S&P is where it is today.
The result would be a market crash so epic it would make the market response to Lehman and AIG’s failure seem like a walk in the park by comparison.‘
The unfunded liability of federal pensions have skyrocketed to more than $750 billion in the most recent accounting year available, according to an annual government report obtained by the Federal Times.
The unfunded liability hit $761.5 billion in fiscal 2011 — an increase of $139 billion from the year before, The Times reported.
The Times extracted the information from the Office of Personnel Management (OPM)’s Civil Service Retirement and Disability Fund annual report for 2012, which it received upon request to the OPM.