The economy isn't getting better and the unemployment numbers we keep seeing are far from accurate. According to CNN Money, 76 percent of Americans are living paycheck-to-paycheck. 

With the fracas in Washington over how to stop student loan interest rates from spiking, there’s more attention than ever on the student loan "bubble.”  To pinpoint apt solutions, it’s worth considering the college loan issue as a version of two already irksome public policy problems: the debt dynamics of the mortgage bubble and the third-party-payer problem of the health care system.

NEW YORK (MainStreet)—The debt load graduating students bring with them to the real word has become one of the defining metrics in the student loan crisis. Depending on who you talk to, estimates can range from the mid-$20,000s to around $35,000 if debt owed to family and through credit cards are factored in. Then there's the types of loans—public vs. private—influencing cost. In a bad job market, borrowers have struggled across the board, from law school students to beauty school grads, as though these two disparate occupations were on an equal footing.

(CNSNews.com) - According to the Daily Treasury Statement for July 12, which the U.S. Treasury released this afternoon, the federal debt that is currently subject to a legal limit of $16,699,421,095,673.60 has stood at exactly $16,699,396,000,000.00 for 56 straight days.

That means that for 56 straight days the federal debt has remained approximately $25 million below the legal limit.

The latest study by the Federal Reserve Bank of San Francisco (FRBSF) draws unexpected conclusions that almost make you believe a disgruntled Fed employee did it. But be assured, it’s an official study published on the FRBSF website (here is a link to the actual research report posted on the FRBSF website).

The study analyzes and quantifies the effect of large-scale asset purchases (LSAPs), also known as quantitative easing (QE) and lower interest rates, on the economy and inflation.

The nation’s fiscal situation is much worse today than when President Obama first took office. Public debt borrowed in credit markets stands at 73.6 percent of gross domestic product (GDP), a level last seen after World War II. And yet, the news and many lawmakers will tout a very different story.

The U.S. government was barely involved in the housing finance market before the Great Depression. Subsequently, the Federal National Mortgage Association (commonly known as Fannie Mae) and the Federal Housing Administration (FHA) attained an almost legendary status for having "saved” the housing market in the 1930s with various forms of government guarantees. The perceived success of these institutions has led many—including many Members of Congress—to suggest that the housing market cannot properly function without a government guarantee. One of the great ironies is that the government programs initiated in the early 1930s were nationalized versions of innovations that had long existed in the private market.

For much of human history, most individuals have lacked economic freedom and opportunity, condemning them to poverty and deprivation.

Today, we live in the most prosperous time in human history. Poverty, sicknesses, and ignorance are receding throughout the world, due in large part to the advance of economic freedom. In 2014, the principles of economic freedom that have fueled this monumental progress are once again measured in the Index of Economic Freedom, an annual guide published by The Wall Street Journal and The Heritage Foundation, Washington’s No. 1 think tank.

In his State of the Union Address, President Obama told Congress to "give America a raise.” But as the job forecasts are revealing, he might as well have told them to "kill some American jobs.”

Why? Heritage experts forecasted months ago that a proposed minimum wage hike would kill the very jobs it’s supposed to support. But when the Congressional Budget Office (CBO) said the same thing this week, it forced the White House and congressional liberals to defend their calls for the increase.

If President Obama and Congress fail to act this year, an enormous, unprecedented tax increase will fall on American taxpayers starting on January 1, 2013. The Washington Post called the looming tax increase "Taxmageddon,”[1] and Federal Reserve chairman Ben Bernanke called it a "massive fiscal cliff.”[2]

This impending tax increase is mostly the result of the expiration of many long-standing policies that all expire at the end of 2012. President Obama and Congress should start working together now to prevent this massive tax increase rather than waiting until the end of the year. That would assure families, businesses, and investors that their taxes will not rise sharply as the economy is still staggering to its feet and show the voters that Washington really can get important things done—even in an election year.

Fundamental Tax Reform Is Needed Now

• A Drain on the Economy: High marginal tax rates and a battalion of tax distortions discourage productivity, slowing the rise in wages and economic growth and making it difficult for businesses to compete globally.

• Far Too Complicated: The current tax system is too complex. The income tax inflicts a multitude of rules and exceptions that lack transparency and fairness.

President Obama said something truly great in his State of the Union Address this year. He told Congress:

[S]ince the most important investment many families make is their home, send me legislation that protects taxpayers from footing the bill for a housing crisis ever again, and keeps the dream of homeownership alive for future generations.

That sounds magnificent, and we couldn’t agree more. No one wants another housing crisis, and taxpayers certainly shouldn’t be on the hook for it.

Wells Fargo, the nation’s largest home lender and the most profitable U.S. bank in 2013, will return as much as $14.7 billion or as little as $13.5 billion, estimates show. ThatPhotographer: Patrick T. Fallon/Bloomberg

The biggest U.S. banks are about to learn whether they can pay out more than $75 billion in excess capital to investors as the Federal Reserve completes stress tests of their ability to survive new economic calamities.

Wells Fargo & Co. (WFC) and JPMorgan Chase & Co. (JPM) would lead a 69 percent increase in dividends and stock buybacks over the next 12 months after the central bank releases results of its annual tests on March 20 and March 26, according to analysts’ estimates compiled by Bloomberg. That’s assuming the companies pass, which some of the analysts say is less than assured.

WASHINGTON (MarketWatch) — The arrival of spring will help settle the question everyone on Wall Street is wondering: Just how much has severe weather hurt the economy in early 2014?

Economists divide into two camps. The largest one believes the weather is far and away the main reason for a slowdown in U.S. growth since the start of the year. A smaller group acknowledges the dampening effects of a harsh winter, but they suspect the economy still has pockets of weakness that are keeping it in a post-recession pattern of herky-jerky growth.

Adjustable-rate mortgages, one of the main culprits of the housing crisis, are back in vogue. But banks say this time is different.

Financial groups are sweetening terms to entice customers to take out these loans, known as ARMs, whose rates can jump after a few years. Some ARMs are cheaper, when compared with fixed-rate mortgages, than they have been in more than a decade.

The tactics are reminiscent of the period before the 2008 crisis, when ARMs exploded in popularity as banks and mortgage brokers touted their low initial rates to consumers.

Abstract

Improper accounting for Fannie Mae’s and Freddie Mac’s budgetary impact has created the illusory effect that the government-sponsored enterprises (GSEs) represent a free lunch for Washington, which is encouraging higher spending and harming efforts to eliminate the entities. The GSEs’ off-budget status excludes them from federal budget rules and processes, and hides the real cost to taxpayers from federal control of Fannie and Freddie. GSE profits paid to the Treasury in 2013 alone have resulted in federal spending and deficits being underreported by more than $100 billion. The Budget and Accounting Transparency Act of 2014 (H.R. 1872) would take an important first step toward GSE elimination by putting both entities on budget and including market risk in estimates of their cost to taxpayers.

Testimony before 
Health, Education, Labor, and Pensions Committee 
United States Senate 
June 25, 2013

James Sherk
Senior Policy Analyst in Labor Economics
The Heritage Foundation

View supplemental questions for the record: What is Minimum Wage: Its History and Effects on the Economy—Questions for the Record.

Chairman Harkin, Ranking Member Alexander, and Members of the HELP Committee, thank you for inviting me to testify this afternoon. My name is James Sherk. I am a Senior Policy Analyst in Labor Economics at The Heritage Foundation. The views I express in this testimony are my own, and should not be construed as representing any official position of The Heritage Foundation.

Recent court rulings and regulatory filings contain some important news for households with individual retirement accounts, Medicare beneficiaries with chronic conditions, and owners of variable annuities that generate a guaranteed income. Here's a roundup of the recent developments and guidance on how to use the information to your advantage.

Limiting IRA Withdrawals

If you pull money from an individual retirement account before age 59½, you normally owe income tax on the withdrawal and a 10% penalty. But an exception known as the "once-per-year rollover rule" allows tax-free withdrawals if the funds are returned to an IRA within 60 days.

My colleagues at the MIT AgeLab are conducting an informal survey of Americans across the nation asking them to identifythree things they’ll be doing in life after 65 . We don't use the "R” word in our question because asking specifically about "retirement” tends to elicit familiar, if not trite, images of gardening, golf and family gatherings.

While those responses certainly make the list of the thousands of people who have taken a moment to answer, the overwhelming answer for most participating in this informal "person on the street” study, regardless of age or gender, is working.

A welcome relief from rising health-care costs for U.S. consumers is being less warmly received at the Federal Reserve.

The slowdown is frustrating the efforts of Chair Janet Yellen and her colleagues to lift inflation out of the doldrums, suggesting they will need to press on with record-low interest rates.

Price increases, not counting volatile food and energy costs, decelerated to a 1.1 percent year-over year pace in February from 2 percent two years earlier, with medical goods and health-care services accounting for almost a third of the slowdown, according to data compiled by Bloomberg based on the government’s personal consumption expenditures price index.

Well, the same can be said about retirement portfolios. We should be able to see how our portfolios will react under stress, says Daniel Satchkov, a chartered financial analyst and president of RiXtrema, a risk modeling and consulting firm that focuses on extreme financial-market events and has built a portfolio crash testing service.

And then we need to figure out whether to accept or mitigate those stress points.

It’s a bummer when you see how much income tax comes out of your paycheck. But when you see that Social Security line item, do you think, "At least that’s going to pay for my retirement”?

It’s not.

The tax money you’re paying into Social Security today is going to fund today’s retirees. Who will pay for your benefits? The next generation of workers.

The best that can be said of Tax Day is that it provides a yearly reminder of just how convoluted the tax code is and how much damage it does to the economy. It should also serve as a periodic reminder that filing taxes does not have to be this way. Tax reform, if done right, would help Americans in numerous ways. 

If something you thought to be true were not true, when would you want to know about it? In today’s world, with all the financial information from the media, radio, TV and websites, the truth can be redefined and actually be transformed into something that is not true. Simply put, if you repeat something over and over again, it will be perceived as being fact. Marketing companies use these tactics when marketing their products. So does the financial-services industry.

Take a look at an average American couple, who earned the average income during their lives and retired at the age of 65. Together, they earned about $47,000 in their final year of work. They would receive a joint Medicare benefit valued at $283,500.* The reality is, they would have paid only $43,000 in Medicare taxes during their working years. This represents a $240,000 loss to the government. Remember, this is only ONE husband and wife.

Many professionals in the financial services business have the luxury of not knowing what they should know. You see, they cannot be aware of something they are not aware of. Some professionals in this industry have it all wrong. 

Recently I was reminded of a lesson in life that should be shared with everyone. There was a time in my life where I was in great physical shape. I used to work out at a local gym that was also known to train amateur fighters. One day while I was working out an older man came up to me and said "Hey kid, you look like you’re in pretty good shape . . . have you ever thought about boxing?” I said, "Not really” and he said "It’s the ultimate in conditioning and a skill that will change your life. I think you could be good at it.” He then said "Look, you’ve got nothing to lose and I can get you started.” I said, "What the heck, I’ll try it.”

Can average Americans borrow their way to prosperity? The answer is no. Years ago, America was based on strong family values. We were a "pay as you go” nation that learned the value of incomes and savings. Today, America has become a nation of consumers that has attached liens and promissory notes on much of its future income. Debt ratios of the average-American household have reached record highs. This is far different than the Founding Fathers of our nation could ever imagine. In the future, there will be unintended consequences in paying for the debts we carry.

1. Taxes

Taxes are the largest transfers in your financial life. The most common taxes are the income tax and social security tax. As part of the payroll tax, over the past several years, these taxes have not gone up much. The other hundreds of taxes that don’t make headlines continue to go up almost on an annual basis. In recent years, taxes have increased about 42% faster than personal incomes. State and local taxes have increased over 100% faster than national incomes. You now have to work five months of the year just to pay your taxes.

In order to know where you want to go, you need to know how much time you have to get there. So your age and that of your spouse (if you’re married) will be the root of all your thinking. It will also be important to understand the dynamics of your family. Understanding the makeup of your family could change your approach to everything that you are trying to accomplish. If parents or grandparents are alive and well, then you must understand they may also represent value in your life.

Qualified retirement plans remain a mystery even to those who blindly believe in their purpose. It is commonly understood that these plans will create great amounts of money for retirement and, at the same time, save taxes for everyone who participates in them. The government, CPAs, accountants, news media, financial planners, banks, investment brokers, benefit managers, and yes, even your parents will tell you that this is true. But the truth today is an elusive commodity.

The debt problem will continue to grow. When the government overspends, which has been going on for about 75 years, its problems are passed on to us in the form of more or higher taxes and reduced benefits. The government’s solution is simple. When businesses overspend or their costs increase because of material costs, government regulation, increase in corporate taxes, labor, etc., the increases are passed on to us in the form of higher prices. Their solution is simple as well.

Surviving the 50% increase in the FICA tax that was stuffed down the windpipes of the Average American last January was hard to swallow considering that the average median income has gone down about 6-8% over the last four years. Now the mandatory tax, as described by the Supreme Court, is about to impact every Americans life through the Healthcare Act.

The average American is beginning to understand that in their everyday financial life stability is an illusion and they are discovering that hope is not a strategy.

What was the recent Government shutdown about? Power And Money. It was not about you or your financial well being.

I bet no one saw this coming. A report from CBS, healthcare.gov Pricing can be off the mark. Really, what a surprise. Of course this comes from the Government that estimated the healthcare website would cost $83 million dollars and its cost is actually heading toward $400 million and in may cases the information is incorrect and/or the site does not work.

In 2012, the major entitlement programs-Social Security, Medicare, Medicaid, and other health care-consumed 45 percent of all federal spending. These programs, and interest on the debt, are on track to consume an even greater share of spending in future years, while the portion of federal spending dedicated to other national priorities will decline.

Families understand that it is unwise to repeatedly spend much more than they take in. But Washington continues its shopping spree on the taxpayer credit card with seemingly no regard to the stack of bills the nation has already piled up.

Runaway spending on Medicare, Medicaid, and Social Security will drive federal debt to unsustainable levels over the next few decades. Total national debt comprises publicly held debt (the most relevant to credit markets) and debt that one part of the government owes to another, such as the Social Security Trust Fund.