Americans depended more on government assistance in 2010 than at any other time in the nation’s history, a USA TODAY analysis of federal data finds. The trend shows few signs of easing, even though the economic recovery is nearly 2 years old.

A record 18.3% of the nation’s total personal income was a payment from the government for Social Security, Medicare, food stamps, unemployment benefits and other programs in 2010. Wages accounted for the lowest share of income ”” 51.0% ”” since the government began keeping track in 1929.

The income data show how fragile and government-dependent the recovery is after a recession that officially ended in June 2009.

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A group of the largest US banks and fund managers stepped up the pressure on Congress and the Obama administration to reach a deal to increase the country’s debt limit, saying that even a short default could be devastating for the financial markets and economy.

The warning over the debt limit is the strongest yet to come from Wall Street, highlighting growing nervousness among investors about the US political system’s ability to forge a consensus on fiscal policy.

The most pressing budgetary issue confronting Congress and the Obama administration is the need to raise the US debt ceiling, which stands at $14,300 billion.

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There are structural problems in the economy as growth slows and middle-class incomes stagnate. There are structural problems in the welfare state as baby boomers spend lavishly on themselves and impose horrendous costs on future generations. There are structural problems in energy markets as the rise of China and chronic instability in the Middle East leads to volatile gas prices. There are structural problems with immigration policy and tax policy and on and on.

As these problems have gone unaddressed, Americans have lost faith in the credibility of their political system, which is the one resource the entire regime is predicated upon. This loss of faith has contributed to a complex but dark national mood. The country is anxious, pessimistic, ashamed, helpless and defensive.

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[Here is the Bloomberg Headline: Swiss Franc Reaches Highest In At Least 40 Years Versus Dollar]

This is painful and sad and (go under the chart to the time box and click “max” all the way to the right) for an even longer term perspective check this out.

The share of renters who spend more than half their income on housing is at its highest level in half a century and it’s no longer just low-income tenants who are feeling the pain, according to a Harvard University study scheduled for release Tuesday.

About 26 percent of renters ”” or 10.1 million people ”” spent more than half their pre-tax household income on rent and utilities in 2009. That’s because incomes slipped dramatically from their peak at the start of the decade even as rents kept rising.

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China needs to guard against volatility in US Treasury prices should investors demand higher returns from US government debt, a researcher at the Chinese central bank said on Monday.

Zhang Jianhua, a head of research at the People’s Bank of China, said worries that the heavily indebted US government may not repay its debt could drive Treasury yields higher and cause US debt prices to fluctuate.

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[MARK SHIELDS] I mean [the Republicans] want to go after the social programs. And each time, they take this election win as a mandate to do it, and they end up…

DAVID BROOKS: Well, but I can say, on the substance, they are right each time. I mean…

JIM LEHRER: You think it is courageous to do that?

DAVID BROOKS: Well, I mean, as I said, your average Medicare enrollee, average income, making I don’t know what it is, $50,000 a year, is paying in $145,000 over the lifetime into the system, taking out $450,000.

Well, there is a big gap there. And that is unsustainable. And so the $450,000 has to be brought down over time. And they are absolutely right to try to bring it down. It just happens to be extremely unpopular to try to talk about that.

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The U.S. dollar’s downward slide is accelerating as low interest rates, inflation concerns and the massive federal budget deficit undermine the currency.

With no relief in sight for the dollar on any of those fronts, the downward pressure on the dollar is widely expected to continue.

The dollar fell nearly 1% against a broad basket of currencies this week, following a drop of similar size last week. The ICE U.S. Dollar Index closed at its lowest level since August 2008, before the financial crisis intensified.

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Members of the International Monetary Fund emerged from their huddle in Washington last weekend resolved to keep every option open to slow the flood of dollars pouring into their countries, including capital controls. That’s a dangerous game, given the need for investment to drive economic development. But it’s also increasingly typical of the world’s reaction to America’s mismanagement of the dollar and its eroding financial leadership.

The dollar is the world’s reserve currency, and as such the Federal Reserve is the closest thing we have to a global central bank. Yet for at least a decade, and especially since late 2008, the Fed has operated as if its only concern is the U.S. domestic economy.

The Fed’s relentlessly easy monetary policy combined with Congress’s reckless spending have driven investors out of the United States and into Asia, South America and elsewhere in search of higher returns and more sustainable growth. The IMF estimates that between the third quarter of 2009 and second quarter of 2010, Turkey saw a 6.9% inflow in capital as a percentage of GDP, South Africa 6.6%, Thailand 5%, and so on….

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The State Department has a “rigidly narrow” view of diplomacy that neglects religion’s role in foreign affairs, a prominent Catholic ambassador charged on Sunday (April 17) as he announced his resignation.

Other foreign policy experts have another name for it: Religion Avoidance Syndrome.

And the departure of Douglas Kmiec as ambassador to Malta, they say, is symptomatic of a longstanding God gap in American foreign policy.

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“More than two years after the beginning of the recent crisis, U.S. policymakers have still not agreed on how to reverse recent fiscal deterioration or address longer-term fiscal pressures….”

–S&P credit analyst Nikola Swann in a statement today explaining why S and P shifted its outlook on America’s credit to “negative”

This is a timely reminder of the seriousness of America’s fiscal issues, for the country and for the rest of the world.

The continued failure to come up with a credible medium-term fiscal reform program would increase borrowing costs for all segments of US society, thereby undermining investment, employment and growth. It would also curtail foreigners’ appetite to add to their already substantial holdings of US assets. And it would weaken the dollar.

The US also risks eroding its standing at the core of the global monetary system.

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Shares on Wall Street opened sharply lower and Treasury prices fell on Monday after the Standard & Poor’s rating firm lowered the outlook for the United States to negative, saying that there was a risk that lawmakers might not reach agreement on how to address the country’s fiscal issues.

“More than two years after the beginning of the recent crisis, U.S. policymakers have still not agreed on how to reverse recent fiscal deterioration or address longer-term fiscal pressures,” a credit analyst with Standard & Poor’s, Nikola G. Swann, said. At the same time, the firm affirmed the government’s AAA rating.

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S&P sees a “material risk that U.S. policymakers might not reach an agreement on how to address medium- and long-term budgetary challenges by 2013; if an agreement is not reached and meaningful implementation is not begun by then, this would in our view render the U.S. fiscal profile meaningfully weaker than that of peer ‘AAA’ sovereigns.”

Read it carefully and read it all.

[KIM] LAWTON: Carter has a new book called The Violence of Peace: America’s Wars in the Age of Obama. He claims the man many voters considered the “peace candidate” has turned into a “war president” with an expanding philosophy about the use of force. Carter says that philosophy was signaled in Obama’s 2009 acceptance of the Nobel Peace Prize.

President Barack Obama (from 2009 Nobel Peace Prize acceptance speech): Inaction tears at our conscience and can lead to more costly intervention later. That’s why all responsible nations must embrace the role that militaries with a clear mandate can play to keep the peace.

{STEPHEN] CARTER: What’s striking about the war in Libya, whether one is for it or against it, is that it shows that President Obama was serious, that he actually meant what he said, that he actually believes that’s a justified use of American power.

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The University of Texas Investment Management Co., the second-largest U.S. academic endowment, took delivery of almost $1 billion in gold bullion as the metal reaches a record, according to the fund’s board.

The fund, whose $19.9 billion in assets ranked it behind Harvard University’s endowment as of August, according to the National Association of College and University Business Officers, last year added about $500 million in gold investments to an existing stake, said Bruce Zimmerman, the endowment’s chief executive officer. The holdings reached about $987 million yesterday, as Comex futures closed at $1,486 an ounce….

“Central banks are printing more money than they ever have, so what’s the value of money in terms of purchases of goods and services,” [Kyle] Bass said today in a telephone interview. “I look at gold as just another currency that they can’t print any more of.”

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Keller did get his dander up after Assange said that watching the American news media cover international events is like watching a goldfish bowl where readers pay little attention to outside perspectives.

Keller seemed to take that as a slight against the prestigious New York Times overseas correspondents. “I have to object to the idea that we’re not interested in what happens outside the U.S.,” he said. “We have 40 correspondents and stringers overseas, and we have four people who have been killed covering the wars.”

Assange said he meant no disrespect to the work of Times correspondents living or dead. But he did get the last word on that topic.

“I say that 40 people covering the entire world in the New York Times, which is the opinion leader of the United States, is a state of desperation,” he said.

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Federal Reserve Bank of Richmond President Jeffrey Lacker Thursday said U.S. firms are increasingly looking for an opportunity to raise prices as more expensive commodities squeeze profit margins, raising the risk of inflation.

“In the absence of further energy-price increases, most forecasters do not foresee a significant acceleration in prices this year. We should not take that outcome for granted,” Lacker said at the University of Baltimore.

Earlier Thursday, the Labor Department said prices U.S. manufacturers and wholesalers pay for goods and materials rose a seasonally adjusted 0.7% in March as gasoline prices jumped and food prices fell.

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The leaders of Brazil, Russia, India, China and South Africa also called for stronger regulation of commodity derivatives to dampen excessive volatility in food and energy prices, which they said posed new risks for the recovery of the world economy.

Meeting on the southern Chinese island of Hainan, they said the recent financial crisis had exposed the inadequacies of the current monetary order, which has the dollar as its linchpin.

What was needed, they said in a statement, was “a broad-based international reserve currency system providing stability and certainty” — thinly veiled criticism of what the BRICS see as Washington’s neglect of its global monetary responsibilities.

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The U.S. economy continued to improve over the last month on gains in manufacturing, but firms are feeling the effects of higher energy and raw material costs, the Federal Reserve said Wednesday.

“While many districts described the improvements as only moderate, most districts stated that gains were widespread across sectors, and Kansas City described its economic gains as solid,” the U.S. central bank said in its “beige book” summary.

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…here’s the truth. Around two-thirds of our budget is spent on Medicare, Medicaid, Social Security, and national security. Programs like unemployment insurance, student loans, veterans’ benefits, and tax credits for working families take up another 20%. What’s left, after interest on the debt, is just 12 percent for everything else. That’s 12 percent for all of our other national priorities like education and clean energy; medical research and transportation; food safety and keeping our air and water clean.

Up until now, the cuts proposed by a lot of folks in Washington have focused almost exclusively on that 12%. But cuts to that 12% alone won’t solve the problem. So any serious plan to tackle our deficit will require us to put everything on the table, and take on excess spending wherever it exists in the budget. A serious plan doesn’t require us to balance our budget overnight ”“ in fact, economists think that with the economy just starting to grow again, we will need a phased-in approach ”“ but it does require tough decisions and support from leaders in both parties. And above all, it will require us to choose a vision of the America we want to see five and ten and twenty years down the road.

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In reality, finding a way to raise taxes may well be the central political problem facing the United States.

As countries become richer, their citizens tend to want more public services, be it a strong military or a decent safety net in retirement. This country is no exception. Yet our political culture is an exception. It has made most tax increases, even to pay for benefits people want, unthinkable.

This is where the Bush tax cuts come in. They have created a way for inertia to be fiscally responsible.

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Every president since Jimmy Carter has called for the country to become more energy independent. Yet none of them have ever done anything to accomplish that. The result is that our reliance on foreign oil has inexorably increased. With the current turmoil in the Mideast, the price of gasoline breaking the $4-a-gallon barrier and the Chinese becoming voracious competitors for imported oil, this would seem an ideal time to pass a law that could lessen our dependence on foreign crude.

Oilmen are incorrigible optimists, and Boone is no exception; he thinks the bill will pass quickly. Not long ago, President Obama spoke out in favor of it, in a speech that included a shout-out for Boone. Already, the bill has attracted 157 co-sponsors. “I think the House can pass it in 30 days,” Boone says.

I hope he’s right. Natural gas is cheaper than oil. It’s cleaner. And it’s ours. If Congress can’t pass this thing, there’s really no hope. ”ƒ

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The scale of America’s deficit and debt problem is staggering.

Thanks to an ageing population, exploding health care costs and inaction from both sides of politics, the Government Accountability Office now estimates that the United States is looking down the barrel of a $90 trillion fiscal gap over the next 75 years.

Treasury secretary Tim Geithner estimates that the US is adding about $125 billion of debt each month and the nation is expected to hit its $14.3 trillion debt ceiling in May.

Former treasury secretary James Baker describes the “debt bomb” as the number one problem for America.

“If we didn’t have the dollar as the de facto reserve currency of the world, we’d be Greece. I mean we are broke,” he exclaimed on CNN.

But doing something about it would take real gumption and the political cycle isn’t helping….

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The US lacks a “credible strategy” to stabilise its mounting public debt, posing a small but significant risk of a new global economic crisis, says the International Monetary Fund.

In an unusually stern rebuke to its largest shareholder, the IMF said the US was the only advanced economy to be increasing its underlying budget deficit in 2011, at a time when its economy was growing fast enough to reduce borrowing.

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“In the coming years, a lot of people will still be paying off their student loans when it’s time for their kids to go to college,” said Mark Kantrowitz, the publisher of FinAid.org and Fastweb.com, who has compiled the estimates of student debt, including federal and private loans.

Two-thirds of bachelor’s degree recipients graduated with debt in 2008, compared with less than half in 1993. Last year, graduates who took out loans left college with an average of $24,000 in debt. Default rates are rising, especially among those who attended for-profit colleges.

The mountain of debt is likely to grow more quickly with the coming round of budget-slashing. Pell grants for low-income students are expected to be cut and tuition at public universities will probably increase as states with pinched budgets cut back on the money they give to colleges.

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Top Federal Reserve officials sent a clear signal that the Fed is unlikely to follow the European Central Bank in lifting interest rates from rock-bottom levels anytime soon, playing down the idea that soaring commodity prices will lead to broader U.S. inflation.

At the Economic Club of New York on Monday, Janet Yellen, the Fed’s vice chairwoman, said U.S. monetary policy “continues to be appropriate.”

Recent increases in prices of oil, grain and other commodities are “unlikely to have persistent effects on consumer inflation or to derail the economic recovery” and are “not likely to warrant any substantial shift in the stance of monetary policy,” she said. The key, Ms. Yellen added, is that households and businesses don’t expect inflation to take off in the long run.

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Put aside the cruise brochures and let the garden retain that natural look for a few more years. Demography and declining investment returns are conspiring to keep you at your desk far longer than you ever expected.

This painful truth is no longer news in the rich world, and many governments have started to deal with the ageing problem. They have announced increases in the official retirement age that attempt to hold down the costs of state pensions while encouraging workers to stay in their jobs or get on their bikes and look for new ones.

Unfortunately, the boldest plans look inadequate. Older people are going to have to stay economically active longer than governments currently envisage; and that is going to require not just governments, but also employers and workers, to behave differently.

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The Republican budget released on Tuesday is a daring one in many ways. Above all, it would replace the current Medicare with a system of private health insurance plans subsidized by the government. Whether you like or loathe that idea, it would undeniably reduce Medicare’s long-term funding gap ”” which is by far the biggest source of looming federal deficits.

Yet there is at least one big way in which the plan isn’t daring at all. It asks for a whole lot of sacrifice from everyone under the age of 55 and little from everyone 55 and over. Representative Paul Ryan, the Wisconsin Republican who wrote the plan, calls the budget deficit an “existential threat” to the United States. Then he absolves more than one-third of all adults from responsibility in dealing with that threat.

This decision doesn’t make him unique in Washington. There is nearly a bipartisan consensus that any cuts to Medicare and Social Security should spare the baby boomers and the elderly. And, certainly, retirees or people on the verge of retirement shouldn’t have their benefits changed radically. But the consensus, like Mr. Ryan’s plan, goes too far.

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If you want to understand better why so many states””from New York to Wisconsin to California””are teetering on the brink of bankruptcy, consider this depressing statistic: Today in America there are nearly twice as many people working for the government (22.5 million) than in all of manufacturing (11.5 million). This is an almost exact reversal of the situation in 1960, when there were 15 million workers in manufacturing and 8.7 million collecting a paycheck from the government.

It gets worse. More Americans work for the government than work in construction, farming, fishing, forestry, manufacturing, mining and utilities combined. We have moved decisively from a nation of makers to a nation of takers. Nearly half of the $2.2 trillion cost of state and local governments is the $1 trillion-a-year tab for pay and benefits of state and local employees. Is it any wonder that so many states and cities cannot pay their bills?

Every state in America today except for two””Indiana and Wisconsin””has more government workers on the payroll than people manufacturing industrial goods.

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