The way the price of oil has plummeted this week on the dollar's rise amid the flight-to-safety lends more support to the theory that if the U.S. budget was balanced, crude would fall, oh, about $30 or $35.

Oil is priced in dollars. Hence, when the dollar falls, oil's price usually rises, and vice-versa. Starting in 2001, the dollar began to weaken as the U.S. budget went from a surplus under President Bill Clinton to a deficit under President George W. Bush, with the euro strengthening from about 82 cents versus the dollar to the current $1.3605. During that time oil's price has more than tripled from the $25 per barrel crude price in 2001.

Political Science Scholar Larry Sabato co-wrote, The Party's Just Begun, which could also prove to be an apt phrase for the political climate in the months ahead in Washington.

That's because Congressional Republicans, emboldened by the securing of their 41st -- and filibuster-capable -- vote in the Senate as a result of Scott Brown's victory in the Massachusetts U.S. Senate race, may now choose to lock horns with U.S. President Barack Obama, D-Illinois, over his proposed $3.8 trillion fiscal 2011 budget.

Much has been made of the U.S. national debt, totaling about $12.3 trillion. (To see the U.S. national debt in real time, click here.)

Economists agree that the debt is high and that it has to be reduced over time. The nation should not as a policy have large, unfunded programs and obligations.

There's a baseball play-by-play announcer with a pretty good team, whose made a small fortune uttering phrases like, "I tell you what you can do with that prediction: You can take that prediction and throw it in the East River. That's how much that prediction is worth."

In general, the same can be said about economic/budget projections. A little advice regarding economic and budget projections: don't work yourself up in to a lather over them.

California update: Gov. Arnold Schwarzenegger (R-Calif.) is expected to ask President Obama to ease federal mandates and minimums on social programs to save the state up to $8 billion.

The action is needed because California, which has already cut programs to eliminate previous budget deficits, faces up to a $21 billion budget deficit for this fiscal year, Bloomberg News reported Thursday.

As in previous attempts, a possible federal transaction tax faces an uphill battle in Congress, and that's probably just as well.

U.S. Rep. Peter DeFazio, D-Oregon, and U.S. Sen. Tom Harkin, D-Iowa, have proposed a transaction fee for all financial transactions: one-quarter of one percent (0.025%) for stock transactions; and a two-one hundredths of one percent (0.02%) levy on standardized commodity futures contracts.

Congress will likely increase the debt ceiling by $1.8 trillion to roughly $14 trillion, before the year-end holiday recess. The House will act first, followed by the Senate.

Congress has to raise the ceiling or the U.S. government will grind to a halt in a few weeks. There's little chance the majority, led by the Democrats, will face any substantive opposition from the minority, the Republicans. The reason? In 1995-96, the Republican-led Congress picked a fight with President Bill Clinton, D-Arkansas, and temporarily shut down the federal government. The result was a public backlash against the Republican Party.

In the 1960s, President Lyndon Johnson's economic/social policy, the Great Society, came up against a counterforce and competing claim few in public policy circles at that time had expected: Lyndon Johnson himself.

Johnson, in a decision that would alter U.S. society and the cultural landscape, chose to escalate U.S. involvement in the Vietnam War, and vastly increased government defense spending. The spending, when combined with spending for the Great Society, posed the question: "Could the U.S. economy tolerate increased government spending for defense and for social programs without an increase in inflation?" This is known in economics circles as the "guns and butter" question.

The U.S. dollar continues to weaken, which has led to commodity price increases, including a higher-than-fundamentals-dictate oil price of about $80 per barrel, and U.S. Treasury Department professionals are working long-and-hard to continue to refinance and rollover U.S. debt to finance the U.S. government's operations -- all because the budget deficit is high.

What could take pressure off all of the above? Well, in addition to letting the 2001 Bush income tax cut expire in 2011 as expected, Congress could pass a modest tax increase above the expiration amounts -- for example, increasing the top two income tax brackets by 2-4 percentage points.

One modest ray of light on the fiscal front for the United States: the U.S. Treasury, as expected, announced that total borrowing for the current quarter (October quarter) will be 43% lower, as a result of a reduction in money needed to help the U.S. Federal Reserve manage its balance sheet.

The Treasury said net borrowing will total $276 billion for October through December, compared to the previous estimate of $486 billion. The Treasury also projects a borrowing of $478 billion for the January-March quarter.

Can Congress balance the federal budget without a tax increase?

Indeed it is possible, but to do it Congress would have to undertake fiscal policy changes of Herculean proportions. Namely: radically changing Social Security's benefit for retirees, turn Medicaid over to the states, and implement other spending cuts.

One of the nation's foremost economic minds is sending an alarm signal regarding the U.S. budget deficit and national debt.

Former U.S. Federal Reserve Chairman Alan Greenspan said he's not "overly concerned" about the recent weakness in the U.S. dollar, Bloomberg News reported Thursday. However, Greenspan is concerned about the long-term costs to the United States associated with its rising national debt.

Is it time to rethink the U.S. job creation paradigm? It may very well be.

The Obama administration is said-to-be weighing whether to propose a corporate tax credit for new hires and extending unemployment insurance and Cobra benefits in light the nation's job creation drought, The Wall Street Journal reported(subscription required.)

What's one way to lower U.S. gasoline prices? Cut the U.S. budget deficit.

The two seemingly disparate conditions are, in fact, linked. A large deficit, such as the one the United States has been running for basically the past decade (and especially since the start of the financial crisis), weakens the dollar.

Notch another better-than-expected data point for the U.S. economy: the federal budget deficit totaled $111.4 billion in August, the U.S. Treasury Department announced Friday, Bloomberg News reported -- a level well below the $140.0 billion Bloomberg News survey estimate.

The August deficit brings the 2009 fiscal year deficit to about $1.37 trillion, largely ballooned by the $787 billion stimulus package to jump-start the U.S. economy and the $700 billion bank sector bail-out. There is one month left (September) in the current fiscal year. July's budget deficit was unrevised at $180.6 billion.