Jump to content
Head Coach Openings 2024 ×
  • Current Donation Goals

    • Raised $2,716 of $3,600 target

Marching toward a debt crisis


Muda69

Recommended Posts

4 hours ago, TrojanDad said:

My comments about political party platforms went right by you didn't it. I just said it was bigger than any one man/woman.  

If you want to judge a very large group of people in the US, knock yourself out.  I doubt many will lose any sleep.

I get it...you liked Hillary.  Time to move on.

No he was for the guy who barely beat "none of the above". 

  • Haha 1
  • Kill me now 1
Link to comment
Share on other sites

2 hours ago, DanteEstonia said:

Enjoy losing your Medicare, and paying for those next hips out of pocket.

As it should be with a true constitutional, limited government.  Something you obviously abhor.

 

  • Disdain 1
Link to comment
Share on other sites

Fiscal Conservatism Is Dead. Republicans Killed It.: https://www.dailywire.com/news/50152/hammer-fiscal-conservatism-dead-republicans-killed-josh-hammer

Quote

"There are two ways to conquer and enslave a nation. One is by the sword and the other is by debt." - John Adams

"Fiscal conservatism," R.I.P. And while the Democratic Party has been an aider and abettor of this untimely death since at least the presidency of Lyndon Johnson, it is the Republican Party — the purported partisan home for fiscal conservatism — that ought to be credited with the fatal coup de grâce.

Let's review.

The much-vaunted Tea Party movement that rose to prominence in 2009 – 2010 always was, as I put it three years ago, "internally compromised by its warring constitutionalist and populist factions." For a brief period of time, following the 2010 U.S. Senate primary victories of Mike Lee in Utah and Rand Paul in Kentucky, it seemed that genuine constitutionalism and debt-averse fiscal conservatism were on the ascendancy. In the summer of 2011, House Republicans managed to leverage control of one half of one-third of the federal government to force Senate Democrats and a breathtakingly leftist White House to compromise on real, meaningful spending reforms. The Budget Control Act of 2011 — and the so-called "sequestration" it wrought upon the federal fisc — capped discretionary spending over the ensuing ten-year period, resulting in roughly two trillion dollars in savings.

It is pretty depressing to look back, eight years later, and recognize that the summer of 2011 likely represented the high watermark for fiscal conservatism in the modern Republican Party. What has happened since then is nothing other than massive deficits run amok, indefensible budget cap busting, debt binges galore, and reckless borrowing on the nation's proverbial credit card in large service to the Chinese Communist Party. This perfidy has now taken the form of a horrific budget bill that Majority Leader Sen. Mitch McConnell and President Donald Trump are now set to enact into law. The new budgetary capitulation would lead to nearly two trillion dollars in new spending over the next decade and outright cancels the budget caps for the final two years of the Budget Control Act, among other betrayals.

For the second straight day, I ask: Why do Republicans even bother to win elections?

In the aftermath of the 2012 presidential election shellacking, the Republican National Committee (RNC) analyzed the results and told conservatives that fiscal conservatism was the leg of the traditional Reagan-era "three-legged stool" on which to focus. That RNC "autopsy" was very clearly wrong. It is actually libertarianism and classical liberalism — an innate hostility to government interventionism in any and all areas of life — that lack a core base of popular political support and electoral relevance. But the point is that the Republican Party cannot even do that right. Whereas the Party ought to be eschewing its erstwhile uncompromising attachment to classical liberalism while doubling down on debt-averse fiscal conservatism, it seems that Republicans are actually doing the complete opposite.

Fiscal conservatism arguably had a nice run — or at least a nice rhetorical run. But it is now deader than a dodo bird. And Republicans killed it.

Uni-party.

 

  • Like 1
  • Disdain 1
Link to comment
Share on other sites

  • 2 weeks later...

We've Already Blown Past Last Year's Federal Budget Deficit: https://reason.com/2019/08/13/weve-already-blown-past-last-years-federal-budget-deficit/

Quote

To grasp what dire shape the budget deficit is in, one only needs to glance at a handful of recent Bloomberg News headlines. There was "U.S. Posts Largest-Ever Monthly Budget Deficit in February" in March, followed by "U.S. Budget Gap Balloons to $739 Billion Despite Tariff Revenue" in June. In July, the headline was "U.S. Budget Gap Widens to $747 Billion in 9 Months Through June," and the first sentence of the article noted that the deficit had grown by 23 percent this fiscal year, "as rising spending eclipsed a small bump in revenue from the Trump administration's tariffs. And now, as the summer ends, we have "U.S. Budget Deficit Already Exceeds Last Year's Total Figure," which notes that federal expenditures between October and June were up 6.6 percent over the previous fiscal year. The $866 billion budget gap so far this fiscal year represents a 27 percent increase over the same period last year. 

 

The ever-expanding deficit is a direct result of policy choices: the tax cuts passed by President Donald Trump and congressional Republicans in 2017, followed by the spending increases called for in the bipartisan budget deals that followed. The math here is about as basic as it gets. When you reduce tax revenues on the one hand and then increase spending on the other, you increase the deficit, which measures the gap between revenues (taxes) and outlays (spending).  

These policy choices have contributed to a federal budget outlook that the Congressional Budget Office (CBO) has repeatedly described as unsustainable—as in, we can't keep doing this forever. We are currently on track for deficits that exceed $1 trillion starting in 2022, which is expected to equal more than 5 percent of the entire economy. Every dollar that moves through the economy will contain a deficit nickel. Since 1946, that's only happened five times, mostly in the immediately aftermath of the Great Recession. 

 

This combined with this:

Dow tumbles 600 points after bond market flashes a recession warning: https://www.cnn.com/2019/08/14/investing/dow-stock-market-today/index.html

Quote

The Dow fell more than 600 points Wednesday after the bond market, for the first time in over a decade, flashed a warning signal that has an eerily accurate track record for predicting recessions.

Here's what happened: The 10-year Treasury bondyield fell below 1.6% Wednesday morning, dropping just below the yield of the 2-year Treasury bond. It marked the first time since 2007 that 10-year bond yields fell below 2-year yields.
US stocks fell as investors sold stock in companies and moved it into bonds. The Dow (INDU) was about 2.4% lower. The broader S&P 500 (SPX) was down 2.4% and the Nasdaq (COMP) sank 2.6% Wednesday.
 
CNN Business' Fear and Greed Index signaled investors were fearful. The VIX (VIX) volatility index spiked 20%.
Investors are on edge because the German economy shrank in the second quarter, and the US-China trade war still looms large over markets, despite the latest truce. Industrial production in China grew at the weakest rate in 17 years.
As the global economy sputters, investors are plowing money into long-term US bonds. The 30-year Treasury yield fell to 2.05%, the lowest rate on record.

 

Good times ahead........................

  • Disdain 1
Link to comment
Share on other sites

  • 3 weeks later...

The Moral Dimension to Our National Debt: https://www.cato.org/publications/commentary/moral-dimension-our-national-debt

Quote

"Oh Lord, give me chastity,” St. Augustine is reputed to have said. “But don’t give it yet.” So it is with Republicans who have vowed to show some fiscal discipline — sometime during President Trump’s second term.

But while we are waiting, the Congressional Budget Office has announced that this year’s budget deficit will top $960 billion, $63 billion more than predicted in May of this year. And next year’s deficit will almost certainly exceed it. After that, the era of trillion-dollar deficits is here to stay. By 2029, CBO reports our $22 trillion national debt will top around $34 trillion.

President Trump may accomplish the truly Herculean feat of becoming a bigger deficit spender than President Obama. And he’ll do it without a catastrophic recession to deal with.

How did we get here? Contrary to conventional wisdom, it wasn’t the Republican tax cut. In fact, when compared to 2018, tax revenues went up 3 percent in the first nine months of fiscal year 2019. Would they be even higher in the absence of those cuts? Maybe. But the real problem, as usual, is out-of-control spending.

The CBO estimates that federal outlays in 2019 will total $4.4 trillion, a $300 billion increase in nominal spending since 2018. Discretionary spending is up. Defense spending is up. Entitlement spending is up. There is no effort to prioritize or make the difficult choices of governing, there is only … more.

While I realize that Congress controls the purse strings, it is also true that President Trump has shown exactly zero interest in restraining spending. The only time he speaks out on budget matters is to demand more money for his latest pet project.

As bad as this is, we can hardly look to the Democrats for relief. Their spending plans would make Caligula look like Scrooge McDuck. Consider that with the release of his $16.3 trillion green-energy plan, Bernie Sanders has now promised more than $58 trillion in additional spending over the next ten years.

Ok, you say, but Bernie is an avowed socialist, so we should expect as much. What then about Elizabeth Warren, who “has a plan for that,” proposing an estimated $40 trillion in new spending over the next decade. Or Kamala Harris, who would spend an additional $43 trillion over ten years. And Pete Buttigieg wants to spend an additional $6.9 trillion. Even supposed moderate Joe Biden has called for around $2.97 trillion in spending so far.

Worse, the Iowa caucuses are still six months away. The giant pander-fest that is the Democratic primary is just getting started. The race is on to see which candidate can be the first to promise more than $100 trillion in spending the government can’t afford.

One wonders how all those young people complaining about their student debt would react if they understood that their theoretical share of the national debt was about $67,000.

The growing debt does not come without consequences. There are, of course, economic repercussions. Over time, debt can slow growth, reduce wages, and hinder our flexibility in responding to economic slowdowns.

More important, there is a moral dimension as well. Every child born today inherits a portion of that debt. We are living at our children’s expense. You can’t get much more “taxation without representation” than that.

If only someone in Washington cared.

 

  • Disdain 1
Link to comment
Share on other sites

The High Price of a "Free Lunch": https://mises.org/wire/high-price-free-lunch

Quote

One of the Ten Commandments is “thou shalt not steal,” and theft is generally condemned in most religions, yet our religious leaders and followers have essentially turned a blind eye to government theft.

Based on a policy of envy, Bernie Sanders, for example, has bluntly stated he intends to tax the rich to fund his programs, as though the word rich itself justifies theft. The current crop of other democratic candidates is offering a beehive of free programs without any real discussion on how to pay for them.

Three Ways to Pay for the State

Governments can finance these programs in only three ways: (1) direct taxation of its citizens, (2) borrowing money, and/or (3) printing money. Few citizens understand the nefarious effects these methods can have on their own well-being. None of them provide “free” money.

The first and most obvious way to raise money is by direct taxation. When you pay your income tax or sales tax, you are brutally aware of how much money is being taken out of your own pocket. If the government only uses these taxes to fund itself, it would quickly run into serious taxpayer opposition; would we still be in Afghanistan today if the government took your flat-screen TV or cell phone to pay for soldiers half a world away?

The second way to raise money is by government borrowing. When the government borrows, it takes money from people who are trying to save, promising a seemingly riskless asset: a government bond. The government has displaced money that would normally have been used to invest in a new computer or machines or buildings, or even a consumption good as a new car. When the government borrows, there are real sacrifices today, not in some distant never existing future when the debt is repaid. There are real resources that are extracted from the economy in the now and present. This is a good example of what is seen, what is not seen and what should be foreseen. Government borrowing finances government consumption which crowds out investment spending that would normally have created a more prosperous economy.

Government Crowds Out Other Borrowers

Now, government borrowing is normally also constrained. The more the government borrows, the greater the demand for loanable funds and the higher the rate of interest. Here again, taxpayers who are also trying to borrow to buy a car or a house would soon realize that it’s the government borrowing that is crowding them out of the loan market. Of course, there is a point of no return for government debt, when the markets doubt a country’s ability to repay this debt — as Greece discovered in 2010.

Now, the obvious question is, how can the US or any other country run record budget deficits and have rock-bottom interest rates at the same time? The answer is the third way by printing money, or often called “quantitative easing.” This way also impacts the government’s ability to borrow.

A simple example will make this path of funding clearer. Suppose an economy has $10 to purchase 10 pencils. The price of the pencils will be $1 each. If the price increases (inflates) to $2 each while the supply remains constant, there would be 5 pencils that can’t be purchased, but if the cost of the pencils were reduced (deflated) to only 50¢ each, there would be people holding $5 looking to purchase nonexistent pencils. Supply and demand in the marketplace give us a price of $1 per pencil. Now suppose the economy is growing and is now producing 20 pencils. Because there are now more pencils in the supply pipeline, the price of pencils will drop to 50¢, a deflation rate of 50%. Deflation here reflects society pushing back the constraint of scarcity. It cannot eliminate scarcity or all prices would be zero, but this deflation shows an increase in the standard of living for everyone.

Two of the greatest periods of GDP growth in the US, 1820 to 1850 and 1865 to 1900, had deflations of 50%. Deflation should be hailed instead of being scorned as it is currently by most professional economists and central bankers.

Now, returning to our initial example of $10 and 10 pencils. Suppose the government prints another $10 to buy pencils but our supply of pencils has not changed. The money supply has doubled so we now have $20 chasing 10 pencils. The price for each pencil will inflate to $2, and the government will be able to buy 5 pencils by cutting the purchasing power of money in half. In other words, you have been robbed or taxed 5 pencils because your cash can now purchase less than before.

If at the same time the economy is growing, then we would have $20 chasing 20 pencils and the price of pencils would have remained at $1. There is no inflation but the rise in real income, exemplified by the 10 pencils that would normally have gone to the citizenry, has been siphoned off or stolen by the government. To a large degree, this is what has been happening since we moved to a fiat currency system in 1933. The central bank has been keeping the CPI in check but has created massive asset inflation, a massive redistribution of income from the poor to the rich and has been a major contributor to financing ever-growing government expenditures.

As Lord Keynes said,

By a continuing process of inflation governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method, they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security but at confidence in the equity of the existing distribution of wealth.

Many in the lower rungs of the economic ladder blame their declining real incomes, and other inequities, on capitalism. They should, instead, be blaming the central bank.

When the government borrows, it increases the demand for loanable funds, and with a fixed supply, interest rates should normally rise. If at the same time the central bank is increasing the supply of loanable funds by printing money to buy government bonds, then interest rates will decline if the increase in supply is greater than the increase in demand. Here, we are basically monetizing the debt. Worldwide, this printing has currently driven interest rates to zero or into negative territory. Using the economy as an excuse, central banks have been monetizing government debt, alleviating any pressure on governments to control their spending.

Continuing from Keynes,

As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery.

Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.

Many economists are currently predicting we will experience another devastating recession in the US. Will we repeat the errors of the past by trying to fix a credit crisis with more debt? Or will we find a permanent solution by ending central banking, fractional reserve banking, and the government’s ability to borrow and print money? If we do, any future government spending would require an immediate and clear sacrifice on the part of the citizenry: unlike what politicians would have you believe; there is no free lunch.

 

  • Disdain 1
Link to comment
Share on other sites

  • 2 weeks later...

Don't Worry, Partisan Politics Isn't Getting in the Way of Government Spending: https://reason.com/2019/09/20/dont-worry-partisan-politics-isnt-getting-in-the-way-of-government-spending/

Quote

What's got your goat right now? Maybe it's all those climate-change strikes that are giving schoolkids cover for playing hooky on a beautful early Autumn day. Or maybe it's that we're not doing enough to combat climate change. Blackface is back in the news, thanks to Canadian Prime Minister Justin Trudeau's compulsion to impersonate other races. What else is going on? Unending modifications by Democratic presidential candidates to the theme of "Medicare for All." An intriguing and emerging possible scandal involving Donald Trump, the Ukraine, and interference in the 2016 presidential election. Or maybe it's actually an intriguing and emerging scandal involving the deep state trying to hamstring a president.

There isn't a day—an hour, really—that goes by where you can't lose yourself in breaking news or developments in all sorts of stories. Which is exactly how the people running the federal government probably want it. While we're outraged or flummoxed by the latest outrage du jour, the feds manage to keep spending more and more money that we don't have. The practice is so routine that only oddballs such as Rep. Justin Amash (I–Mich.) even bother pointing it out anymore:

 

Today, the House will pass another spending bill, which extends current, reckless spending levels until November 21. It also continues multiple corporate welfare programs. Democratic and Republican leaders support it, and the president is expected to sign it. I'll be voting no.

— Justin Amash (@justinamash) September 19, 2019

 

But hallelujah, the members of the House of Representatives put aside their deep divides on whatever to make sure the cash keeps flowing without any interruption. From CNN's account:

The House of Representatives on Thursday passed a bill to temporarily extend funding for the federal government and avert a shutdown at the end of the month.

The bill, approved 301-123, will extend funding at current levels with limited exceptions through November 21, potentially setting up an end-of-the-year showdown over government spending that could drag into the holiday season.

The Senate will need to pass the bill next for it to make it to President Donald Trump's desk for his signature.

The federal government's fiscal year ends on September 30. Through the first 11 months of the current fiscal year, the government managed to spend so much money that the deficit topped $1 trillion by the end of August. Not so long ago, it took a full year and a major economic downturn to produce so much red ink. Nowadays, we can do it simply through sheer will. The Wall Street Journal reports:

Higher spending on the military, rising interest expenses on government debt and weak revenues early in the fiscal year combined to push the deficit up 19% from October through August, compared with the same period a year earlier. Government spending climbed 7%, to $4.1 trillion, outpacing higher federal tax receipts, which grew 3%, to $3.1 trillion.

So as we're getting bent out of shape by an unending litany of outrages, annoyances, and ephemeral stories, just remember that there is in fact one great thing that both Democrats and Republicans, liberals and conservatives, agree on: We can always spend more money.

....

Yep, uni-party to the max.   Deflect the populace by arguing about Trump, abortion, healthcare, etc.  but keep on spending that borrowed money.

 

  • Disdain 1
Link to comment
Share on other sites

  • 4 months later...

Republican Deficit Hypocrisy Will Make America's Debt Problems Much Harder To Solve https://reason.com/2020/01/29/republican-deficit-hypocrisy-will-make-americas-debt-problems-much-harder-to-solve/

Quote

It is obvious at this point that Republicans, on the whole, do not care about debt or deficits—at least not in any substantive sense. That's not just an economic problem. It's a political problem that is increasing the risk of a debt crisis in the future. 

Although the GOP spent the better part of Barack Obama's presidency complaining bitterly about the trillion-dollar budget gaps the country ran during his first term, and President Trump promised on the campaign trail to eliminate all federal debt, deficits have increased even faster than expected under his watch, and total federal debt has risen accordingly. And that, in turn, is likely to have long-term consequences for both the economy and for the broader politics of debt and deficits. 

You can see the nation's trajectory spelled out in painstaking detail in the Congressional Budget Office's annual budget outlook, released yesterday. 

Not only does it show that the trillion-dollar deficits that followed the financial crisis have returned, it projects that deficits of that size are expected to be a fixture throughout the coming decade. Indeed, the next decade's deficits are now expected to be $160 billion higher, all together, than was projected as recently as last August. We are entering an era of permanent trillion-dollar deficits. 

By 2030, CBO projects the deficit—the annual gap between spending and revenues—will reach $1.7 trillion, which is roughly the size of the entire federal budget in 1999. Rising debt and deficits, the budget office predicts, will coincide with slowing economic growth, dropping from 2.2 percent this year to 1.5 percent a decade from now. 

The federal government will be borrowing more, and the economy will be expanding at a slower pace. It may not be an immediate economic crisis, but we are spending and borrowing ourselves into stagnancy and decline. 

The GOP's what-me-worry acquiescence to this eventuality has been driven mostly by political considerations: In the absence of a crisis, lawmakers, regardless of party, have little incentive to close the budget gap, because doing so requires some combination of raising taxes and cutting spending, neither of which are particularly popular. The biggest drivers of long-term debt are old-age entitlements, Medicare and Social Security, that benefit seniors, many of whom are reliable Republican voters. Trump ran against cutting those entitlements, and although his rhetoric has wavered slightly in recent weeks, he has not pressed the issue, and Republicans in Congress don't exactly seem eager to tackle it either.

Nor does Trump appear to worry much about what happens down the road. When Trump advisers warned in 2018 about the possibility of a future deficit crisis, Trump reportedly shrugged it off, saying, "Yeah, but I won't be here." Absent some forcing event, there is little reason to expect any significant departure from the party's current trajectory of do-nothingism. 

One possible forcing event would be the election of a Democratic president, which would almost certainly see the GOP return to its Obama-era complaints about sky-high debt and deficits. Yet if that were to happen, it's easy to imagine that Democrats would simply dismiss these complaints as hypocritical, viewing them not as efforts to enforce needed fiscal restraint but as attempts to check the opposite party's agenda. Republicans, in other words, aren't just piling on debt now, while they are in power. They aren't just exacerbating the likelihood of long-term economic stagnation. By demonstrating how little they care about fiscal restraint, they are creating a political environment that makes it even more likely that Democrats will proceed with a deficit denialist agenda of their own. 

You can already see evidence of this in the Democratic primary race, where candidates with pricey domestic policy agendas have consistently sat atop the polls. And you can see it in the liberal intelligentsia's embrace of simplistic deficits-don't-matter economic theories, and complaints about how the CBO's emphasis on basic budget math hampers the progressive agenda. The GOP's rank deficit hypocrisy is fueling the factions of liberalism that view concerns about fiscal soundness as barriers to political and policy success. 

In the end, that faction may not gain power. And if it does, Republicans might find other avenues to block their agenda. Even still, with every passing day that the Trump-era GOP proves that Obama-era Republicans only cared about high debt and deficits as a means of criticizing a Democratic president, rather than as a substantive policy goal, the likelihood increases that Democrats will take the GOP's current behavior as license to pursue an even more expansive and expensive agenda of their own. Republicans under Trump haven't just carelessly let deficits rise and debt pile up, they have made it even harder to find a politically possible way of righting the nation's fiscal trajectory. 

Uni-party to the Max.  At the expense of our country's future.

 

 

  • Thanks 1
  • Disdain 1
Link to comment
Share on other sites

Uncle Sam Doubles Down on His Spending Addiction: https://reason.com/2020/02/06/uncle-sam-doubles-down-on-his-spending-addiction/

Quote

My fellow taxpayers, this is your quarterly warning that Uncle Sam is not a good steward of your money. The Congressional Budget Office just released its most recent 10-year projections for federal spending and revenues. The picture is not pretty.

A quick overview: This fiscal year, 2020, the federal government will collect $3.6 trillion in tax revenues. But due to its spending addiction, the government will expend $4.6 trillion. This means that the government will have to borrow $1 trillion this year alone, in order to cover a deficit of 4.6 percent of GDP. This is the first trillion-dollar deficit not due to a global recession.

The money to fund the deficit comes from individual and institutional investors, both domestic and foreign. And for all the anti-China rhetoric out there, it's worth remembering that China is the second largest foreign investor in our federal debt, right behind Japan. I guess that's one Chinese import the Trump administration doesn't seem to mind.

According to the CBO, this enormous overspending will continue and expand over the next decade, from 21 percent of GDP to 23.4 percent. Revenue as a share of GDP is projected to grow from its current 16.4 percent level to 18 percent in 2030, or $5.75 trillion. But that's not enough to cover the $7.5 trillion the federal government will spend then, hence a projected budget deficit of $1.74 trillion.

Because deficits accumulate, it's not surprising that our debt is growing. Debt held by the public will rise from 81 percent of GDP today to above 98 percent by 2030—from $17.2 trillion today to $31.4 trillion then. When you add in the debt that Uncle Sam owes to other accounts within the government, like Social Security, you get a much bigger number.

All of the above, of course, assumes that the law as written today won't change. The CBO scores our budget outlook on the assumption that existing legislative provisions persist. However, everyone knows that some things will change. Congress will evade rules meant to limit spending, and—as always—it will indulge in a bipartisan spending binge while refusing to let popular tax cuts expire.

This, in part, explains why deficits in this report are $160 billion higher though 2029 than in the CBO's prior estimates. As the Committee for a Responsible Federal Budget explains in recent commentary about the CBO report, "The largest contributor to the projected increase is the appropriations package enacted in December, which included a permanent repeal of taxes enacted to finance the Affordable Care Act and the revival of various zombie extenders. That package added $500 billion to deficits through 2029, with interest."

This time will be no different. There will be more spending and less revenue than projected. For instance, even if Congress is entirely under the control of Democrats, nobody really believes that they will let all of the middle-class tax cuts expire as planned in 2025. I would not be surprised if the Democrats even manage to extract some spending increases for low-income Americans from the Republicans in exchange for extending these tax provisions. Also, given an opportunity to adopt another bipartisan spending package that adds hundreds of billions of dollars to the deficits, politicians on both sides of the aisle will shamelessly expose their spending addiction.

Then, of course, depending on the president's erratic behavior on trade, the effects of the trade war could have an even worse impact on the budget than currently projected. According to the CBO, the tariffs imposed over the past two years will reduce GDP in 2020 by 0.5 percent (or more than $100 billion) and "reduce average real household income by $1,277." The administration is happy to brag about the additional revenue collected from the tariffs, but there is a negative side to these import taxes, too.

Thankfully, the economy is doing well for now. This good performance is masking many of the ill effects, not just of the trade war but also of our overall fiscal situation. The reality, however, is that a growing economy during a time of peace should not be accompanied by growing deficits.

 

  • Disdain 1
Link to comment
Share on other sites

US Mandatory Spending Projected to Increase Over a Trillion Dollars by 2023: https://mises.org/wire/us-mandatory-spending-projected-increase-over-trillion-dollars-2023

Quote

Every time there is a budget debate, politicians from both parties will discuss the deficit and spending as if the first one did not matter and the latter could only increase. However, the main problem of the US budget in the past four decades is that total outlays rise significantly faster than receipts no matter what the economic growth or revenue stream does. For example, in fiscal years 2018 and 2019, total outlays rose mostly due to mandatory expenses in Social Security, Medicare, and Medicaid. No tax revenue measure would have covered that amount.

Total outlays were $4,447 billion in 2019, $339 billion above those in FY 2018, an 8.2 percent increase. No serious economist can believe that any tax increase would have generated more than $300 billion in additional revenues every year.

The idea that eliminating the tax cuts would have solved the deficit has been clearly debunked by history and mathematics. There is no way that any form of revenue measure would have covered a $339 billion spending increase.

No serious economist can believe that keeping uncompetitive tax rates, well above the average of the Organisation for Economic Co-operation and Development (OECD), would have generated more revenue in a global slowdown. If anything, a combination of higher taxes and weaker growth would have made the deficit even worse. How do we know that? Because it is exactly what has happened in the eurozone countries that decided to raise taxes in a slowdown, and because it is also what all of us witnessed in the United States when revenue measures were implemented.

The US was maintaining a completely uncompetitive and disproportionately high corporate income tax rate (one of the highest in the world), and all it did was make it similar to other countries, such as Sweden and Denmark, which have corporate income tax rates of 21.4 percent and 22 percent, respectively. 

What happened to corporate tax receipts before the tax cut? The evidence shows a weakening operating profit environment: corporate tax receipts fell 1 percent in 2017 and 13 percent in 2016. The manufacturing and operating profit recessions were already evident before the tax cuts. If anything, reducing the corporate rate helped companies hire more and recover, which in turn allowed total fiscal revenues to rise by $13 billion to $3,328 billion in fiscal year 2018, and by $133 billion to $3,462 billion in 2019, both above budget, according to the Congressional Budget Office (CBO). Remember also that critics of the tax cuts expected total receipts to fall, not increase.

US-Budget

Mandatory spending is now at $2 trillion out of $4.45 trillion in total outlays for the fiscal year 2019. This figure is projected to increase to $3.3 trillion by 2023. So, even if discretionary spending stays flat, total outlays are still estimated to increase by more than $1 trillion, significantly above any measure of tax revenues, and that is without considering a possible recession.

Any politician should understand that it is simply impossible to collect an additional $1 trillion per year over and above what are already record-high receipts.

For 2020, tax receipts are estimated to be $3,472 billion compared to $4,473 billion in outlays, which means that there is a $1,001 billion deficit. With outlays consistently above 20 percent of GDP and tax receipts at 16.5 percent on average, anyone can understand that any recession will widen the gap and make deficits even higher.

Deficits mean more taxes or more inflation in the future. Both hurt the middle class the most. More government spending means more deficit, more debt, and less growth.

When candidates promise more “real money” for higher spending, they are not talking of real money. They are talking about real debt, which means less real money going into future schools, future housing, and future healthcare at the expense of our grandchildren’s salaries and wealth. More government and more debt mean less prosperity.

Anyone who thinks that this gap can be reduced by massively hiking taxes is not understanding the US economy and the global situation. It would lead to job destruction, corporate relocation to other countries and lower investment. However, even in the most optimistic estimates of tax revenues coming from some politicians, the revenue-spending gap is not even closed, let alone showing a net reduction in debt. The proof that the US problem is a spending one is in the fact that even those who propose massive tax hikes are not expecting to eliminate the deficit, let alone reduce debt. That is why they add mass money printing to their magic solutions.

us budget

Now, let us ask ourselves one question: if the solution to the US debt and deficit is to print masses of money, why do are increased taxes proposed? If printing money was the solution, the Democrats should have massive tax cuts in their program. The reality is that neither tax hikes nor monetary insanity will curb the deficit trend.

No tax hike will solve the deficit problem. Those tax hikes will help even less when they are supposed to finance even more expenses. No amount of money printing will solve the financial imbalances of the US; they will only worsen the problem. If money printing was the solution, Argentina would be the highest-growing economy in the world.

If the US wants to curb its debt before it generates a eurozone-type crisis leading to stagnation and high unemployment, the government needs to really cut spending, because deficits are soaring due to ballooning mandatory outlays, not due to tax cuts.

Agreed.  The federal government needs to be reduced in size, scope, and power by at least 25% across the board.  That means defense, education, and federal entitlements just to name a few.

Think about the country we are leaving for our children and grandchildren, because our electives officials in Washington sure aren't.

  

  • Disdain 1
Link to comment
Share on other sites

  • 3 weeks later...

The National Debt Is 'Unsustainable' and the Pentagon's Finances Are a Total Mess, Federal Audit Says: https://reason.com/2020/02/28/the-national-debt-is-unsustainable-and-the-pentagons-finances-are-a-total-mess-federal-audit-says/

Quote

The federal government's books are in such bad shape that auditors can't even do their jobs, and the national debt is growing at an "unsustainable" rate, the Government Accountability Office (GAO) warned in its annual comprehensive review of the government's financial statements.

The GAO singled out the Pentagon—as it has every year since 1990, when federal auditors first started trying to peer into the black hole of military spending—for "serious financial management problems." That includes more than 1,300 new issues raised during this year's incomplete audit of the Defense Department. Despite those persistent financial problems, the Pentagon has seen a huge boost in spending under the Trump administration.

Of the 24 federal departments and agencies subject to annual audits under a 1990 law, only the Pentagon and the Department of Housing and Urban Development failed to get a clean review this year. Note that a clean review does not mean there was no wasteful spending—merely that auditors at least were able to see where the spending was going.

"Resolving the problems outlined in our audit report is of utmost importance given the federal government's reported fiscal path," wrote Gene L. Dodaro, U.S. comptroller general and the head of the GAO, in a letter to Congress and President Donald Trump. "Absent policy changes, the federal government continues to face an unsustainable long-term fiscal path."

Measured as a share of the entire U.S. economy, the national debt has doubled in just 12 years and is on pace to grow to historical highs within the next decade. The federal government's budget deficit—the gap between how much revenue it raises and how much money it spends—is expected to exceed $1 trillion this year.

 

DebtGAO.jpg Source: Government Accountability Office

"While the estimated magnitude of the fiscal gap is subject to a substantial amount of uncertainty, it is nevertheless nearly certain that current fiscal policies cannot be sustained indefinitely," the GAO's report concluded. The sooner the growth of the deficit and debt can be slowed or reversed, the less those policies are likely to affect economic growth.

But is anyone listening? Lawmakers from both major parties have worked together in recent years to pass budgets that exploded annual deficits and added to the debt. Democrats running for president are promising to hike federal spending by trillions of dollars to pay for free college, government-run health care, and the fight against climate change—and even though they are also promising to raise taxes, the math doesn't add up. That means deficits will continue to grow. Meanwhile, President Donald Trump has abandoned any pretense of fiscal conservatism, and most of his party has followed suit.

But the report is right there for them to see. When the past decade's fiscal recklessness hits the fan, they won't be able to claim that no one saw this coming.

No, nobody in Congress cares.  

  • Disdain 1
Link to comment
Share on other sites

  • 3 weeks later...

A Trillion-Dollar Deficit This Year Is Now Officially the Best Case Scenario: https://reason.com/2020/03/19/a-trillion-dollar-deficit-this-year-is-now-officially-the-best-case-scenario/

Quote

As policymakers in Washington continue debating the finer points of what is shaping up to be a $1 trillion coronavirus rescue package, the Congressional Budget Office (CBO) on Thursday offered up a reminder that the nation's credit card was already close to being maxed out.

The CBO's latest 10-year budget projection—which takes into account policies enacted through March 6, and therefore excludes any coronavirus response measures—forecasts a $1.07 trillion gap between how much the government will spend and how much it will take in this year. The deficit will continue to grow in coming years, according to the CBO, until hitting $1.7 trillion in 2030. By then, the national debt will exceed $30 trillion and will be roughly equal to the size of the entire U.S. economy for the first time since the end of World War II.

As bad as all that sounds, it is now an almost impossibly optimistic scenario.

The United States appears to be tilting towards a severe economic downturn. The Trump administration is reportedly preparing for unemployment to hit 20 percent—though Treasury Secretary Steve Mnuchin has denied those reports—amid the COVID-19 outbreak and as a consequence of mandatory "social distancing" measures taken to slow its spread. Major stock indices have fallen by as much as 30 percent in the past month.

Taken together, those things will crater tax revenue from all angles. A surge in federal spending, meanwhile, is all but guaranteed. That's a recipe for higher deficits.

Maybe much higher deficits: the Committee for a Responsible Federal Budget, a nonprofit that advocates for the government to balance its books, says the coronavirus crisis may cause current deficits to double this year.

If that happens, the real culprit is not the disease outbreak or even the government's response to it. The blame falls squarely on federal policymakers from both parties who allowed the deficit to boom in recent years. They are the ones who ignored or laughed off warnings about the rising debt

"It is frustrating to see the picture the CBO's latest baseline paints of the hole that we put ourselves in right at the time when we need as much fiscal flexibility as possible," says Maya MacGuineas, the CRFB's president. "As we move—hopefully quickly—to provide the support to assist with this crisis, it's worth keeping in mind why fiscal responsibility matters. Manageable debt during good times puts us in the best possible position to borrow in the times of need."

Instead, during the final three years of the longest run of uninterrupted economic growth in U.S. history, the budget deficit doubled. Now, it's going to explode.

Not a rosy picture for our children and grandchildren.  And yet no one seems to care.  Why is that?

 

  • Disdain 1
Link to comment
Share on other sites

9 hours ago, Muda69 said:

A Trillion-Dollar Deficit This Year Is Now Officially the Best Case Scenario: https://reason.com/2020/03/19/a-trillion-dollar-deficit-this-year-is-now-officially-the-best-case-scenario/

Not a rosy picture for our children and grandchildren.  And yet no one seems to care.  Why is that?

 

Because no one is smart enough to keep taxes high enough during the good times in order to have a rainy day fund for the bad times.

Link to comment
Share on other sites

3 hours ago, DanteEstonia said:

Because no one is smart enough to keep taxes high enough during the good times in order to have a rainy day fund for the bad times.

"Rainy day fund"?  The federal government hasn't had such a thing for decades, unless you call quantitative easing "aka printing more money" a rainy day fund.

And federal spending has risen to the level that I guess you are ok with at least 50% of your earnings going towards taxes? No, no level of taxation will fix this mess, only a true reduction in the spending and scope of the federal government.

 

 

  • Disdain 1
  • Kill me now 1
Link to comment
Share on other sites

The CARES Act plunges the nation into a crash course on experimental economics.—and we're the lab rats.: https://reason.com/2020/03/27/how-much-is-2-3-trillion-more-than-even-obama-could-imagine/

Quote

In 2009, the last time Washington aimed a trillion-dollar firehose at the distressed U.S. economy, the president, a Democrat, repeatedly coupled that act of temporary profligacy with the rhetorical aim of long-term budgetary sobriety.

"One of the central goals of this administration is restoring fiscal responsibility," Barack Obama asserted back then. "Even as we have had to spend our way out of this recession in the near term, we've begun to make the hard choices necessary to get our country on a more stable fiscal footing in the long run."

There were plenty of reasons for contemporaneous skepticism about Obama's claims, but even insincere nods toward a presumed virtue can contribute to a mild braking on vice. Policy battles over deficits, debt ceilings, and old-age entitlements dominated national politics through the end of 2013, and not merely because of then-ornery, now-quiescent Tea Party Republicans. Erskine Bowles, after all, was a Democrat.

But the twin rise of President Donald Trump and Sen. Bernie Sanders (I–Vt.), along with the strains of populism they channeled, chased deficit hawks to the despised corners of polite society by 2015. After that, the main questions left were how many zeroes would end up on the federal check when the next crisis inevitably hit.

George W. Bush's Emergency Economic Stabilization Act of October 2008 came with a $700 billion price tag. Add in Obama's $833 billion American Recovery and Reinvestmenty Act in February 2009, and we're talking a bailout/stimulus combo of $1.53 trillion, or $1.84 trillion in 2020 dollars.

By comparison, the bipartisan stimulus that was very temporarily held up by the near-universally despised Rep. Thomas Massie (R–Ky.), totals around $2.3 trillion, according to the bean-counters at the Committee for a Responsible Federal Budget. Even accounting for population increase (the U.S. had 307 million residents in 2009, around 331 million today), that's an inflation-adjusted per capita increase from around $6,000 11 years ago to $6,950 today.

How much is $2.3 trillion? In nominal terms, it's the same as the entire federal budget for Fiscal Year 2004. Adjusting for inflation gets you back to the federal government's $1 trillion outlay for 1987. Inflation and population together take you back to 1974. In short, Congress just approved a bailout/stimulus of $6,950 per person, which is more than the $6,600 per person in constant dollars that the entire federal government spent in Richard Nixon's final year in office.

The accumulated national debt in 1974 was $475 billion, or around $2.5 trillion in today's money ($11,700 per U.S. resident). George W. Bush inherited we-owe-yous of $5.67 trillion (which adjusts to $8.52 trillion and $30,200 per capita), and left for Obama a present of $10 trillion ($12 trillion/$39,600). As Trump readies his black sharpie for the rescue package, the debt clock stands at $23.6 trillion ($71,300 per person)—and it was being goosed by trillion-dollar annual deficits even before COVID-19 hit the fan.

And unlike Obama in 2009, Trump doesn't currently feel the need to even rhetorically hint at future tradeoffs. The president reportedly said in late 2018 about any future fiscal crisis: "Yeah, but I won't be here." Add in the likelihood of future bailouts and stimuli, and basically we're all Modern Monetary Theorists now.

The annual budget deficit, which snapped an entire generation of conservatives into attention when it crossed the $1 trillion threshold a decade ago, is likely to top $2 trillion before the fiscal year is out. The Government Accountability Office and Congressional Budget Office were calling the country's long-term fiscal outlook "unsustainable" back when the good times were still rolling. Now revenues are taking a massive hit, demand for government service is going through the roof, and the U.S. Mint's going brrrrr.

Libertarians back in 2008-09 tended to make four types of predictions about the bailout/stimulus. One—that the unpredented swooshing of cash and Federal Reserve intrusion into the economy would trigger long-dormant inflation—did not come to pass, and so many policy enthusiasts have taken that as a cue to ignore libertarians.

But there were three other forward-looking objections to socializing the failures of deep-pocketed losers during the financial crisis: that the ensuing debt load would unduly dampen the eventual recovery, that failing to fix the underlying government distortions that caused malinvestments in the first place would make bailouts an eternally recurring phenomenon, and that papering over problems with money would create new, even more dangerous bubbles.

With today's Coronavirus Aid, Relief, and Economic Security (CARES) Act, Congress has cemented what we already suspected: that the federal government does not care about learning from directly relevant mistakes it made in the recent past.

There is no more politics of fiscal prudence in America, just a competition to see who can wag the biggest firehose. While the bodies begin to pile up in New York City and elsewhere, Washington has responded with a massive course of experimental economics. May we respond better than rats in a cage.

 

The American Uni-Party.  The part of Fiscal Destruction and Lost Hope for future generations of American.   

I hope all of your "Democrats" and "Republicans" are proud of yourself.

 

  • Disdain 1
Link to comment
Share on other sites

Trump calls for $2T infrastructure bill as 'Phase 4' of coronavirus response: https://www.foxnews.com/politics/trump-calls-for-2t-infrastructure-bill-as-phase-4-of-coronavirus-response

Quote

President Trump on Tuesday called for a $2 trillion infrastructure bill to serve as “Phase 4” of the federal government’s coronavirus response efforts, just days after Congress approved a massive stimulus package worth even more than that.

“With interest rates for the United States being at ZERO, this is the time to do our decades long awaited Infrastructure Bill,” Trump tweeted Tuesday. “It should be VERY BIG & BOLD, Two Trillion Dollars, and be focused solely on jobs and rebuilding the once great infrastructure of our Country! Phase 4.”

Trump has sought a major infrastructure bill ever since taking office and would appear to be pitching that plan anew as a form of economic stimulus. The president’s tweet comes as lawmakers in both the House and the Senate already are eyeing a fourth coronavirus response bill, though some have voiced caution about continuing to appropriate such massive sums of money.

“I think the odds are we’ll need more legislation. First, we don’t know the extent of the crisis in terms of the magnitude, so that could rise. But there are going to be problems that we don’t realize now that we’re going to have to grapple with,” Senate Minority Leader Chuck Schumer, D-N.Y., said recently, according to The Hill. “So I think the odds are high there will be a COVID-4.”

House Speaker Nancy Pelosi, D-Calif., also expressed the need for further legislation, telling CNN that Democrats “had bigger direct payments in our bill, and we think we’ll get more direct payments in another bill.”

...

*sigh*  Nothing more to say anymore really.   All politicians now believe the U.S. Dollar to just be play money.  Our once great country is doomed, and our children and grandchildren are going to pay the price.

 

  • Like 1
  • Disdain 1
Link to comment
Share on other sites

  • 4 weeks later...

GOP Debt Hypocrisy : https://reason.com/2020/04/23/gop-debt-hypocrisy/

Quote

Republicans in Congress, on the whole, no longer care about debt or deficits—at least not in any substantive sense. That's a problem for a number of reasons, not least that it increases the risk of a debt crisis in the future.

Those same Republicans spent the better part of Barack Obama's presidency complaining bitterly about the trillion-dollar budget gaps the country ran during his first term, and President Donald Trump promised on the campaign trail to eliminate all federal debt. But since Trump's election, deficits have increased even faster than expected, and the total federal debt has risen accordingly. That, in turn, is likely to have long-term consequences for both the economy and for the broader politics of debt and deficits.

You can see the nation's trajectory spelled out in painstaking detail in the annual budget outlook from the Congressional Budget Office (CBO). Not only does it show that the trillion-dollar deficits that followed the financial crisis have returned, it projects that deficits of that magnitude will be a fixture throughout the coming decade. Indeed, the next decade's cumulative deficits are now projected to be $160 billion higher than was projected as recently as August 2019.

By 2030, CBO projects the deficit—the annual gap between spending and revenues—will reach $1.7 trillion, which was roughly the size of the entire federal budget in 1999. Rising debt and deficits, the budget office predicts, will coincide with slowing economic growth, dropping from 2.2 percent this year to 1.5 percent a decade from now. The federal government will be borrowing more, and the economy will be expanding at a slower pace. It may not lead to an immediate economic crisis, but the nation is spending and borrowing into stagnancy and decline.

The GOP's acquiescence to this eventuality has been driven mostly by political considerations: In the absence of a crisis, lawmakers have little incentive to close the budget gap, because doing so requires some combination of raising taxes and cutting spending, neither of which are particularly popular. The biggest drivers of long-term debt are Medicare and Social Security, which benefit seniors, many of whom are reliable Republican voters. Trump ran against cutting those entitlements, and although his rhetoric has wavered slightly in recent months, he has not pressed the issue. Republicans in Congress don't exactly seem eager to tackle it either. (Trump's 2020 budget proposed reducing some Medicare payments, similar to proposals made by the Obama administration, but would leave the program's essential benefit structure intact.)

Trump also does not appear to worry much about what happens down the road. When his advisers in 2018 raised the possibility of a future deficit crisis, the president reportedly shrugged it off, saying, "Yeah, but I won't be here." Absent some event to force his hand, it's unlikely that attitude will change.

One possible forcing event would be the election of a Democratic president in 2020, which would almost certainly see the GOP return to its Obama-era complaints about sky-high debt and deficits.

Yet if that were to happen, Democrats would most likely dismiss these complaints as hypocritical—not as honest efforts to enforce needed fiscal restraint but as self-interested attempts to check the opposite party's agenda. The Democratic primary race, which has prominently featured calls for tens of trillions in new spending, has already provided evidence for this view.

That view is also evident in the liberal intelligentsia's embrace of simplistic deficits-don't-matter economic theories and in complaints about how the CBO's emphasis on basic budget math hampers the progressive agenda. The GOP's rank deficit hypocrisy is empowering liberals who view concerns about fiscal soundness as barriers to political and policy success.

With every passing day, the Trump-era GOP lends credence to the idea that Obama-era Republicans cared about deficits only as a means of hampering a Democratic president. By demonstrating how little they care about fiscal restraint while in a position to do something about it, Republicans are creating a political environment that makes it even more likely that Democrats will proceed with a deficit denialist agenda of their own.

Republicans under Trump haven't just carelessly let deficits rise and debt pile up. They've made it even harder to find a politically plausible way of righting the nation's fiscal trajectory.

Uni-party to the max.  And to the slow destruction of this country for our children and grandchildren.

 

  • Disdain 1
Link to comment
Share on other sites

×
×
  • Create New...