Driving the Day: 12/13/12

Dec 13, 2012

Need to know…

  • National Deficit to Top $1 Trillion in 2013. The U.S. budget deficit is poised to exceed $1 trillion for the fifth straight year. The Treasury Department reports the budget gap reached $172 billion in November, up from $120 billion in October. November’s deficit was 25% higher than the same month a year ago. America's slow and steady economic recovery is yielding increasing tax revenue, with receipts rising 10% to $346 million in the first months of the government's fiscal year. Yet, this modest increase is outpaced by continued growth in spending, up $86 billion since the start of FY 2013.
  • Fed to Hold Interest Rates Until Employment Improves. The U.S. Federal Reserve says interest rates will continue near zero until the unemployment rate drops to at least 6.5%. The central bank previously said interest rates would hold near zero through mid-2015, but with the economic recovery continuing at a sluggish pace, the Fed is now tying changes in the interest rate to its economic and unemployment goals. The Fed also announced Wednesday it would replace its open-ended asset buying program with a new set of debt purchases, buying $45 billion a month in longer-term Treasuries in addition to $40 billion a month in mortgage-backed bonds.
  • Fiscal Cliff Negotiations Stall as Deadline Looms. There appears to be little progress in the "fiscal cliff" negotiations, as House Speaker John Boehner said on Wednesday that he and the White House remain far apart on the best way to reduce spending and increase tax revenue. CBS reports Boehner has told fellow lawmakers not to make plans for the holidays, as the ongoing negotiations may require Congress to delay its recess and continue negotiating in Washington. Boehner has rejected the president's latest proposal, which includes $1.4 trillion in tax hikes, while the administration has rejected the GOP proposal, which cuts $900 billion in spending and raises $800 billion in tax revenue by closing loopholes and deductions.

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