Tag Archives: Deficits

Pity the Nation: War Spending Is Bankrupting America, by John W. Whitehead

The warfare state is certainly helping to bankrupt America, but John Whitehead goes too easy on the welfare state. From Whitehead at rutherford.org:

“Pity the nation whose people are sheep
And whose shepherds mislead them
Pity the nation whose leaders are liars
Whose sages are silenced
And whose bigots haunt the airwaves
Pity the nation that raises not its voice
Except to praise conquerors
And acclaim the bully as hero
And aims to rule the world
By force and by torture…
Pity the nation oh pity the people
who allow their rights to erode
and their freedoms to be washed away…”
~ Lawrence Ferlinghetti, poet

War spending is bankrupting America.

Our nation is being preyed upon by a military industrial complex that is propped up by war profiteers, corrupt politicians and foreign governments.

America has so much to offer – creativity, ingenuity, vast natural resources, a rich heritage, a beautifully diverse populace, a freedom foundation unrivaled anywhere in the world, and opportunities galore – and yet our birthright is being sold out from under us so that power-hungry politicians, greedy military contractors, and bloodthirsty war hawks can make a hefty profit at our expense.

Don’t be fooled into thinking that your hard-earned tax dollars are being used for national security and urgent military needs.

It’s all a ruse.

You know what happens to tax dollars that are left over at the end of the government’s fiscal year? Government agencies – including the Department of Defense – go on a “use it or lose it” spending spree so they can justify asking for money in the next fiscal year.

We’re not talking chump change, either.

We’re talking $97 billion worth of wasteful spending.

According to an investigative report by Open the Government, among the items purchased during the last month of the fiscal year when government agencies go all out to get rid of these “use it or lose it” funds: Wexford Leather club chair ($9,241), china tableware ($53,004), alcohol ($308,994), golf carts ($673,471), musical equipment including pianos, tubas, and trombones ($1.7 million), lobster tail and crab ($4.6 million), iPhones and iPads ($7.7 million), and workout and recreation equipment ($9.8 million).

So much for draining the swamp.

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As budget deficit balloons, few in Washington seem to care, by Andrew Taylor

Everybody has a plan to eliminate the budget deficit in ten to fifteen years, but the debt and interest payments are ballooning now, and the economy is supposedly doing well. From Andrew  Taylor at apnews.com:

The federal budget deficit is ballooning on President Donald Trump’s watch and few in Washington seem to care.

And even if they did, the political dynamics that enabled bipartisan deficit-cutting deals decades ago has disappeared, replaced by bitter partisanship and chronic dysfunction.

That’s the reality that will greet Trump’s latest budget , which will promptly be shelved after landing with a thud on Monday. Like previous spending blueprints, Trump’s plan for the 2020 budget year will propose cuts to many domestic programs favored by lawmakers in both parties but leave alone politically popular retirement programs such as Medicare and Social Security.

Washington probably will devote months to wrestling over erasing the last remnants of a failed 2011 budget deal that would otherwise cut core Pentagon operations by $71 billion and domestic agencies and foreign aid by $55 billion. Top lawmakers are pushing for a reprise of three prior deals to use spending cuts or new revenues and prop up additional spending rather than defray deficits that are again approaching $1 trillion.

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US Budget Deficit Soars 77% As Federal Interest Expense Hits Record High, by Tyler Durden

The good news just keeps coming on the national debt. From Tyler Durden at zerohedge.com:

Another month, another frightening jump in the US budget deficit.

According to the latest Treasury data, the US budget surplus in January – traditionally one of the few surplus months of the year due to tax receipts vs refunds timing – was only $9 billion, badly missing the $25 billion surplus expected, and far below the $49 billion surplus recorded last January; it was the smallest January gain since 2015.

As a result, the budget deficit for the first four months of the fiscal year, widened to $310 billion, a whopping 77% higher than the $175.7 billion reported for the same period last year, largely the result of the revenue hit from Trump’s tax cuts and the increase in government spending. The deficit was the result of a 2% drop in fiscal YTD receipts to $1.1 trillion, while spending jumped 9% to $1.4 trillion.

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Debt and Deficits: They’re Unsustainable, by Bob Luddy

There’s a certainty to increasing debt and compounding interest: eventually they must end. Either the debt is repaid or repudiated. From Bob Luddy at spectator.org:

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This problem is 10,000 times bigger than the border wall, by Simon Black

The cost of the proposed border wall is a rounding error in terms of total government spending or the US national debt. From Simon Black at sovereignman.com:

We are in the midst of the longest government shutdown in history.

Don’t get me wrong, I like having the government shut down. As I’ve said before, I believe it is my moral duty to pay as little taxes as possible.

The government does some really stupid things with your tax dollars. I’d rather not pay for a $2 billion Obamacare website that doesn’t work, or to defend Congressmen against sexual assault allegations.

So, by starving the beast, I at least ensure they’re not squandering my money.

But I think it’s ridiculous that this government posturing is financially crippling the 800,000 government workers (and millions of contractors) who are now out of work – or being forced to work without pay.

To be fair, last night the president signed a law guaranteeing they would be paid for past work – a month into this fiasco. It’s a step in the right direction, as there’s a word for forcing people to work without pay – slavery.

That’s why I offered to pay the rent of any government workers hurt by the shutdown. I am using my tax savings to bail out some of these government workers the feds left high and dry.

But at its core, this whole shutdown comes down to a disagreement over $5 billion. That is how much money Trump wants to build the border wall between the US and Mexico. And Congress refuses to fund it.

Granted, that’s a lot of money to you and me. And it should be a lot of money to the government, too.

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The US Is Spending $1.5 Billion On Debt Interest Every Day, by Tyler Durden

That $1.5 billion a day figure, already exorbitant, is only going to go up. From Tyler Durden at zerohedge.com:

Several weeks ago, when looking at the US budget data for the recently concluded (Sept 30) Fiscal 2018, we noted that the most troubling observation in the latest data (besides the growing deficit, rising spending and shrinking tax revenues) was that the government paid $523 billion in total interest in fiscal 2018, the highest on record.

Alas, this is just the start, because to fund the fiscal stimulus that has already been enacted, US deficit spending is only set to soar higher, with the resulting interest expense rising above $600 billion in 2019.

But the truly scary nature of this number is in the context of all other G-7 nations: as the following chart from Deutsche Bank’s Torsten Slok reveals, spending on interest expense in the US is now just about $1.5 billion per day, which at current interest rates is orders of magnitude higher than what all other G-7 developed nations spend on interest.

That too is just the start: as Slok notes, “US government last year on average paid $1.5bn each day in interest payments, and this is rising toward $2bn per day over the coming years.

And that’s with rates still relatively low due to the maturity schedule of US debt, which however is only set to rise as existing debt issued over the past decade during record low rates matures and is replaced with debt yielding far more.

How long before this becomes the most politically sensitive economic topic, and how long before the president threatens to fire Powell unless he, too, starts monetizing the debt?

 

 

 

The Nation’s Fiscal Doomsday Machine is Now Unstoppable, by David Stockman

The inexorable forces of mathematics and compound interest are creating their own ugly budgetary realities. From David Stockman at economic policy journal.com:

Earlier this year the Donald provoked a bleep-hole moment per the Fox “family channel” or what was otherwise known as the shit-hole moment across the rest of the MSM.

But whatever you called the contretemps spurred by the president’s crude utterance with regard to certain countries domiciled on the African continent, the claim this was evidence that he’s an incorrigible racist was risible. Actually, we already knew that the Donald is a semi-literate bully, who never got (read) the memo on racial comity—to say nothing of political correctness.

Still, there is a not inconsiderable share of Washington’s preening, self-important ruling class that indulges in that very same kind of gutter talk on a regular basis when puffing their chests and marking the objects of their displeasure. That’s why the shaming chorus which sprung up from all corners of the Swamp was enough to give hypocrisy a bad name.

But if we have to have a shaming of politicians, there is a far better reason for it than that unfortunate presidential slur.

To wit, Trump and the GOP deserve everlasting ignominy for literally shit-canning fiscal rectitude. So doing, they have completely abandoned the GOP’s fundamental reason for being— watch-dogging the US Treasury—in favor of immigrant-bashing, border hysteria and what boils down to crude nativism by any other name.

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The US Spent A Record $523 Billion On Debt Interest In Fiscal 2018, by Tyler

Here’s a new record that will be broken next year if interest rates stay the same or move higher. From Tyler Durden at zerohedge.com:

Earlier this week, when the US closed fiscal 2018 on September 30, we reported that US gross national debt jumped by $84 billion on September 28, the last business day of fiscal year 2018; with this last push higher, total gross national debt in fiscal 2018 rose by $1.271 trillion to an all time record of $21.52 trillion.

What is more stunning, is that only six months ago, on March 16, it had for the first time risen above the $21-trillion mark, while a year ago, at the end of September 2017, it was just $20.2 trillion.

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Debts & Deficits: A Slow Motion Train Wreck, by Lance Roberts

We’re borrowing from the future and sooner or later the future will present the bill. From Lance Roberts at realinvestmentadvice.com:

Last Friday, I discussed that without much fanfare or public discussion, Congress decided to push the U.S. into deeper fiscal irresponsibility with the passage of another Continuing Resolution (CR). To wit:

“The House on Wednesday passed an $854 billion spending bill to avert an October shutdown, funding large swaths of the government while pushing the funding deadline for others until Dec. 7.

The bill passed by 361-61, a week after the Senate passed an identical measure by a vote of 93-7.”

Without the passage of the C.R. the government was facing a “shut-down” just prior to the mid-term elections. So, rather than doing what is fiscally responsible for the long-term solvency and financial health of the country, not to mention the generations to come, they decided it was far more important to get re-elected into office.

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New Age Fiscal Stimulus Is Unprecedented — And Ominous, by John Rubino

Governments are running recession-style deficits when their economies are supposedly healthy. What happens when they run into actual recessions? From John Rubino at dollarcollapse.com:

In a normal business cycle, the economy expands for a while and businesses hire lots of new people at somewhat higher wages, generating enough tax revenue to shrink the government’s budget deficit – and in rare cases produce a surplus. So, for a while, the government borrows less money.

Not this time. The current recovery is nearly ten years old and the labor market is so tight that desperate companies are trying all kinds of new tricks to attract workers – including higher wages.

Yet the US just announced its intention to borrow $1.3 trillion in this fiscal year, the most since the depths of the Great Recession.

And this isn’t a one-shot deal. Trillion-dollar deficits are now projected for as far as the eye can see:

US projected budget deficts new age fiscal

What does this mean? The US has decided that since we’ve borrowed a lot of money in the past and are still here, debt must not matter. Voters don’t care, the markets don’t care, so why not spend money we don’t have on cool stuff in the here-and-now. A new generation of super-weapons? Sure. A wall across 3,000 miles of southern border, check. Tax cuts for people who already more than they’re able to spend? Why not?

But here’s the problem – or the short-term one, anyhow: Using debt to push an expansion beyond its natural lifetime (this one is approaching the longest ever) makes the imbalances that normally end expansions much, much worse. The aforementioned labor shortage, for instance, will only become more extreme if the economy keeps growing. Interest rates, already rising, will keep going up.

10-year Treasury note yield new age fiscal

To continue reading: New Age Fiscal Stimulus Is Unprecedented — And Ominous