“The recent run-up in government debt could have the effect of pushing interest rates way beyond what we’ve seen in the past once the markets fully recover,” according to a new report released today by the conservative Heritage Foundation.
The think tank report lays the groundwork for the conservative argument that will likely shape the debt ceiling debate this fall.
While, the government’s annual deficit is expected to fall to $642 billion this year, federal debt is expected to rise 50 percent over the next decade—then continue to climb higher under existing government policies. “Rapidly rising debt puts taxpayers at serious risk of paying higher interest rates amid a stalled economy,” says Alison Acosta Fraser, who oversaw the report and runs Heritage’s Thomas A. Roe Institute for Economic Policy Studies.
REAL TAXES COMING ON VIRTUAL BITCOINS Bitcoin users will soon be on the hook for paying taxes on their virtual currency. A new report by the Government Accountability Office says the Internal Revenue Service needs to develop more guidance as to when alternative virtual currencies such as bitcoins are subject to taxes so that the government stops losing out on millions in revenue.
The auditors said that it should be taxable when consumers use the currency in place of U.S. dollars to pay for “real goods and services like coffee or web development services.”
Bitcoin has become increasingly popular over the last decade. As of May 1, there were 11 million bitcoins in circulation. Each is valued at more than $100. And between April 1 and May 1 of this year, the number of bitcoin transactions per day has ranged from approximately 8,000 to as many 70,000, the GAO said. - Read the report here
CORKER TO CUT OFF $75 M “GHOST MONEY” TO AFGHANISTAN Sen. Bob Corker, (R-TN) announced Monday that he will suspend $75 million in off-the-books aid to Afghan President Hamid Karzai until the White House can provide “sufficient assurance” that the millions of dollars being dropped off at the palace in bags of cash is not going toward corruption. After The New York Times unearthed the secret aid or “ghost money” in late April, the program received harsh criticism for likely ending up in the Taliban’s hands. - Read more at The New York Times
WHAT WILL BERNANKE DO? The markets are going crazy trying to guess when Federal Reserve Chair Ben Bernanke will finally pull back on his $85 billion per month quantitative easing measures. Some believe it could be as early as September, while others don’t think it will happen while Bernanke is still leading the Fed. The Fiscal Times’ Josh Boak has five things to watch ahead of the Fed’s meeting and announcement tomorrow. - Read more at The Fiscal Times