Economy

On Monday, President Barack Obama proposed a $3.8 trillion budget that would be effective fiscal year 2011. The plan would include big increases in personal and business taxes, as well as modest spending cuts and increases in spending for education, defense and job initiatives.

Discretionary Spending, Tax Increases in the Proposal

In Obama's plan is the idea to cap discretionary spending, which accounts for roughly 17 percent of the total budget. His goal is to narrow the record $1.6 trillion gap between the expenditures in the proposed budget and tax receipts. (Learn about Obama's stimulus plan)

Also, in budget is a plan to increase taxes on upper-income families by nearly $1 trillion dollars. The way he will accomplish this goal is by allowing Bush's tax cuts for these families to expire. In addition, banks, bankers and multinational companies would face new fees and levies. Reports also say that oil companies would lose $39 billion in tax breaks.

The hope is that by making these adjustments, the current deficit would shrink to $727 billion - or 4.2 percent of the gross domestic product - by 2013. However, by reducing the annual deficit, experts say that the federal debt would jump to $8.5 trillion by 2020.

Another Financial Crisis the Result of Obama's New Budget?

Economist Kenneth Rogoff, who was interviewed by the Wall Street Journal, explained that the increased federal debt could result in drastically higher interest rates. In addition, the value of the dollar could plunge, which could cause the economy to face another financial crisis.

As suggested by Rogoff, in order to keep the government at a reasonable federal debt, the president would need to cut some domestic programs and large tax increases - basically, the opposite of what he's doing now.

The idea is that he may be trying to fix the short-term problems, but all of the spending may in essence create long-term issues.

A new government report shows that the U.S. economy grew at the fastest pace in more than six years during the fourth quarter of 2009. The report, which was released on Friday, revealed more specifically that the national gross domestic product rose at a 5.7 percent annual rate. This is much stronger than expected and may be a sign that the economy just may be recovering.

Why the Improvement?

Economists had predicted growth, but not as much as we saw in the fourth quarter. According to a survey from Briefing.com, economists had forecast growth of 4.7 percent. With the economy only rising at a 2.2 percent annual pace in the third quarter of last year, what could have caused the growth?

Some say the improvement was driven by a turnaround in inventories - the supply of goods businesses produce when anticipating sales.

At the end of 2008 and early 2009, many businesses slashed their inventories in fear of the economic conditions. However, according to Friday's report, the inventory increased drastically in last year's fourth quarter, mostly in the auto industry.

Does This Mean the Economy's Improving?

So does this shift in economic growth mean that the economy is improving? Well, not exactly. While inventory is up, personal consumption hasn't grown as much - two percent to be exact.In other words, companies feel comfortable enough to increase their goods but consumers don't feel comfortable enough to buy it.

Since consumer spending accounts for more than two-thirds of economic activity, it's safe to say that the growth of the economy is probably more of a numbers game at this point than a reality.

Have you increased your personal consumption in the last few months?

So, the people in charge of this country have said that the recession is over and we're in the midst of a recovery.

Do you believe it?

With continually high unemployment numbers and low home sales, you could see why we're not entirely convinced. But we try not to be a doom-and-gloom kind of...

If you didn't have a chance to sit down and watch President Barack Obama's speech on Wednesday night, you missed what you thought you missed: information that may affect your wallet. His focus was placed some on health care reform and foreign policy, but mostly, he discussed job growth and...

A new survey released shows that economists are optimistic about the recovery and believe that it will continue in 2010 as job losses slow and hiring picks up. According to results from the survey, which was released on Monday by the National Association for Business Economics, all respondents...

Just when we were starting to feel comfortable that Congress was making a strong effort to protect us, reports reveal that Senate is thinking of dropping the Consumer Finance Protection Agency. This agency, originally proposed by President Barack Obama, was a main component of the new financial...

President Barack Obama is intent on paying taxpayers back for the bailout funds banks received over a year ago and he's thinking of doing so by taxing the banks. The tax would help ensure that the funds be paid back as some begin to doubt that the banks will be able to pay back the funds as...

A lot of amazing events have occurred over the past decade. From the Indian Ocean tsunami having a disastrous effect on thousands of people to the powerhouse YouTube.com first getting its start, the years 2000 to 2009 offered plenty to talk about by the water cooler.

But what about the biggest ...

Economists have been suggesting that we may be nearing the end of a severe two-year job loss streak, however, at the end of its run, it looks as though seven million jobs may be lost forever. The managing director of Economic Cycle Research Institute (ECRI), interviewed by CNNMoney.com, said...

When the Senate returns to their duties after their winter break on January 19, one of the first issues on their agenda will be is to sort through the $154 billion job-creation stimulus package. The House has already passed the package and now it's the Senate's turn to take a stab at it and...