TACO Man at Bat, by David Stockman

The deficit is 6.3 percent of the U.S. GDP. How long can that go on? From David Stockman at David Stockman’s Contra Corner via lewrockwell.com:

Well, here’s hoping that the TACO man (Trump Always Chickens Out) finally grows a pair, steps up to the plate and is willing to ride this shutdown to a new record beyond the 35 days it took him to capitulate in January 2019. After all, these are desperate times fiscally—so anything that might wake-up the somnolent public to the budgetary disaster that is careening down the pike is worth some serious bumps and grinds on the national stage.

Indeed, it is no exaggeration to say that Washington has gone from the ridiculous to the sublime when it comes to managing the nation’s fiscal affairs. The chart below shows the Federal deficit on a rolling 12-month basis and the scandal of it literally screams out.

First, on the eve of the pandemic and lockdown collapse in February 2020, the Federal government was still running a $1 trillion or 4.9% of GDP deficit at a point in the business cycle fully 128 months after the Great Recession bottomed in Q2 2009. By all historic standards—even by Keynesian counter-cyclical fiscal doctrine—-the Federal budget was supposed to be in near balance by then because the fiscal equation had already benefited mightily from the longest continuous economic expansion in American history.

Secondly, a traditional reason for fiscal consolidation during the post-recession recovery period was to position the government to weather any adverse economic or international storms which might come down the pike in the future. And, of course, the mother of all calamities incepted within months when the real GDP plunged at a staggering 33% annualized rate in Q2 2020 in response to the pandemic and the sweeping Washington-ordered lockdowns of the US economy.

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