The fight has begun. Which side are you on?

Obama's $3.55 trillion budget proposal represents a gamble that the American people are ready for the sort of change they embraced when they elected him last November.

His goals are ambitious and it appears the only thing bigger than his ambitions are the obstacles they must clear.

Barrack AddressThat's why President Obama warned on Saturday he was bracing for a fight against powerful lobbyists and special interests who sought to pick apart the $3.55 trillion budget he wants to advance his agenda of reform. "I know these steps will not sit well with the special interests and lobbyists who are invested in the old way of doing business, and I know they are gearing up for a fight as we speak. My message to them is this: so am I," he said.

And a fight he will have. Already waves of opposition are pouring in. In a radio response, the Republicans stuck with their campaign remarks from last year, warning that Democratic spending priorities threaten to destroy the American dream that hard work can build a better life for each successive generation of citizens.

"This week, the president submitted to Congress the single largest increase in federal spending in the history of the United States, while driving the deficit to levels that were once thought impossible," said Senator of North Carolina Richard Burr.

He said Obama's budget commits the government to a billion dollars a day in interest on the debt over the next decade. "Now, instead of working hard so our children can have a better life tomorrow, we are asking our children to work hard so that we don't have to make tough choices today," Burr said. The White House predicts the United States will enter the new fiscal year with a budget deficit of $1.75 trillion - the largest since World War II, and four times the size of this year's deficit.

But Obama has pledged to cut it in half by the end of his first term. Specifically, administration officials say the annual gap between federal spending and tax collections will fall from something north of $1.4 trillion this year -- the highest since World War II -- to $533 billion in 2013. He said a page-by-page examination of the federal budget had already identified $2 trillion in potential savings over 10 years.

But when you look at it from a technical standpoint, this year's budget deficit has already been bloated by major spending in the stimulus package and various financial-sector bailouts which include expenses unlikely to be repeated in future years.

The nonpartisan Congressional Budget Office (CBO) recently predicted that the deficit could be halved by 2013 merely by winding down the war in Iraq and allowing some of the tax cuts enacted during the Bush administration to expire in 2011, as Obama proposed. That alone would cut the deficit to $715 billion, according to the CBO.

As Senior Republican on the Senate Budget Committee Judd Gregg (who recently withdrew as Obama's nominee to head the Commerce Department) said, "You're not getting savings if you're assuming spending that isn't actually going to occur."

Mr. John KeyLast week, we interviewed the American CEO of Canadian-listed gold junior Gryphon Gold regarding their recent Q3 results plus Obama's stimulus and his over-zealous spending. Click on the clip to the right (you may have to log in).

It's tough to side with President Obama when you're an investor and I know most of you are. But I have to admit that his stance and his utmost confidence in his proposal almost make me feel at ease despite all of the loopholes, wordplay and shortcomings of his proposed budgets. Almost.

Better buckle up The Roller Coaster Ride Continues

Better buckle up

RTGAM






If U.S. stock index futures are any indication, major U.S. stock market indexes will carve out fresh 12-year lows on Friday morning when markets open, after investors recoiled from steep losses overseas, a mammoth-sized revision to the U.S. economic contraction in the fourth quarter and a government deal with Citigroup Inc. that seriously dilutes existing shareholders.


With about an hour before markets open, futures for the Dow Jones industrial average were down 139 points, to 7039. During Monday's stock market swoon, the Dow closed below 7115 for the first time in 12 years. Similarly, futures for the S&P 500 were down 17 points, to 735, after closing at a low of about 743 on Monday, before showing signs of rebounding later in the week.


U.S. gross domestic product was revised down to a contraction of 6.2 per cent, annualized, in the fourth quarter - far below an earlier reading of 3.8 per cent that had been well above projections from economists. Although economists had anticipated a downward revision to the quarter's GDP, this was worse than the expected 5 per cent drop.


"In the final analysis, it is clearly evident that the U.S. economy was significantly weaker in the fourth quarter than was first thought, which has a certain irony to it as the initial number was significantly less grim than the initial market expectation," said Millan Mulraine, economics strategist at TD Securities, in a note. "And while we do not believe that this horrendous pace of economic contraction will continue at quite this rate, we expect the economy to remain very weak from some time, with further gaudy declines probable."


Meanwhile, Citigroup Inc. struck a deal with the U.S. government which involves a stock swap that will see the administration take control of more than one third of the struggling bank. As part of the deal, more than $50-billion (U.S.) worth of preferred shares will be converted into common shares. According to the Wall Street Journal, the deal will wipe out about three quarters of the existing shareholders' stake in the bank.

Click Here For The Best Investment You Can Make In A Recession!