Tag Archives: Federal Budget

US Budget Deficit Blows Out To Nine Year High, Up 25% From Year Ago, by Tyler Durden

The deficit and the national debt won’t matter until they matter. From Tyler Durden at zerohedge.com:

The gaping US budget deficit hole is getting bigger with each passing month.

Earlier today, the US Treasury announced that in January (the fourth month of fiscal 2020), the US spent $32.6 billion more than it pulled in, resulting in a deficit that was materially worse than the $11.5BN expected, and also the biggest January deficit since 2011, when the US government spent a net of $49.8 billion.

Total December spending of $405 billion, was 8.8% higher than a year earlier, with the biggest outlays for the month as follows: social security ($91BN), medicare ($87BN), national defense ($53BN), Health ($49BN), Income Security ($39BN), Net Interest ($32BN)and so forth. Meanwhile, receipts increased by a slightly higher 9.5%, from $340BN to $372.3BN, thanks to $217BN in individual income taxes, and $121BN in Social insurance and retirement receipts.

US Budget Deficit Hits $530 Billion In 8 Months, As Spending On Interest Explodes, by Tyler Durden

Here’s the deteriorating US budget situation in pictures. From Tyler Durden at zerohedge.com:

The US is starting to admit that it has a spending problem.

According to the latest Monthly Treasury Statement, in May, the US collected $217BN in receipts – consisting of $93BN in individual income tax, $103BN in social security and payroll tax, $3BN in corporate tax and $18BN in other taxes and duties- a drop of 9.7% from the $240.4BN collected last March and a clear reversal from the recent increasing trend…

… even as Federal spending surged, rising 10.7% from $328.8BN last March to $363.9BN last month.

… where the money was spent on social security ($83BN), defense ($56BN), Medicare ($53BN), Interest on Debt ($32BN), and Other ($141BN).

The surge in spending led to a May budget deficit of $146.8 billion, above the consensus estimate of $144BN, a swing from a surplus of $214.3 billion in April and far larger than the deficit of $88.4 billion recorded in May of 2017. This was the biggest March budget deficit since the financial crisis.

To continue reading: US Budget Deficit Hits $530 Billion In 8 Months, As Spending On Interest Explodes

 

 

“Worse Than You Think” – 8 Reality-Checks From Last Week’s CBO Report, by David Nevins

CBO reports on the government’s finances make for grim reading, but probably not grim enough. From David Nevins at ffwiley.com:

For what they’re worth and for anyone who doesn’t mind digging through the weeds, here are my comments on last week’s budget outlook from the Congressional Budget Office, which I previewed here.

  1. In the baseline scenario that’s widely reported in the media (I’ll abbreviate it BS for this post), the CBO shows federal debt held by the public soaring from 76% of GDP at fiscal year-end in 2017 to 96% of GDP at the end of the ten-year forecast horizon in 2028.
  2. The CBO also restored its alternative scenario (AS), which adjusts for certain constraints on what it’s legally allowed to include in the BS, making it more realistic than the BS. Unfortunately, the AS didn’t appear in annual reports between 2014 and 2017—in those years, the CBO highlighted areas where its BS projections were likely to be wrong but without producing an alternative. Even though it gets only a fraction of the attention given the BS, it’s good to see the AS back. It shows debt held by the public rising to 105% of GDP by the end of 2028, compared to the baseline’s 96% of GDP.
  3. But the AS is also optimistic, partly because it uses the same rosy economic assumptions as the BS and partly because it includes less “emergency” spending than the BS.
  4. As for the economic assumptions, the CBO’s unemployment rate projections are lower than they were last year in every projection year. They show an average unemployment rate for the next ten years of 4.4%, which is almost a third lower than the 6.2% historical average over the past forty years (see the chart below) and at least 0.4% lower than in any other ten-year projection the CBO has ever produced.
  5. For perspective, consider that the Bureau of Labor Statistics shows only one historical ten-year period during which the average unemployment rate was as low as the CBO projects today. That one period was from 1948 to 1957, when the unemployment rate averaged 4.4% as in the CBO’s current projection, but it’s hard to imagine the average would have been that low had the Korean War not pushed unemployment firmly below 4% for 35 consecutive months.

To continue reading:  “Worse Than You Think” – 8 Reality-Checks From Last Week’s CBO Report

3-D Chess: It Only Looks Like Trump is Throwing Away His Presidency, by Ann Coulter

 Ann Coulter has not been impressed by President Trump’s recent displays of his negotiating skills. It looks like the art of the bad deal. From Coulter at anncoulter.com:

I can’t wait to see Trump’s next move in his game of “3-D chess”!

You see, it only looks like Trump is The Worst Negotiator God Ever Created. Instead of telling Democrats, “I won’t even talk about DACA until we have the border wall,” Trump has repeatedly given up the wall, aka The Central Promise of His Campaign, Without Which He Would Not Be in the White House.

He has now signed a spending bill that, if it actually did what it claims to do, prohibits him from building the wall, hiring any new ICE agents capable of making arrests, and building any new detention facilities for illegal aliens.

The strange thing is, as commander in chief, he doesn’t need congressional authority to do any of these things. But he obviously doesn’t know that.

Why? BECAUSE HE’S PLAYING 3-D CHESS!

Instead of making even a fake effort and forcing Democrats to get up off the couch to vote against the wall, Trump cleverly leapt to the front of the anti-Trump parade and pretended it was all his idea.

I told Sen. Schumer: I WANT AMNESTY! I was very clear! Look at him, running around like a loser doing my bidding.

Trump’s main response to a bill that actively prohibits him from keeping his central campaign promise was to denounce Congress for not sending him a bill legalizing “Dreamers.” Which also breaks a campaign promise.

It’s all part of the act, you fools! Trump is making the Democrats think that, even though they don’t have the House, the Senate or the White House, he needs Chuck Schumer’s permission before moving a muscle.

Carefully observe the master. He gives up everything and — in exchange — gets NOTHING. See?

The easy thing to do would be to say, There’s no way any amnesty happens until the wall is complete. Anybody could do that. But we didn’t elect just anybody.

To continue reading: 3-D Chess: It Only Looks Like Trump is Throwing Away His Presidency

Unhinged, Part 1: The GOP’s Fiscal Madness, by David Stockman

Fiscal rectitude is only a quaint term from the past. The Republicans have even abandoned their hypocritical pose as guardians of the public fisc. From David Stockman at davidstockmanscontracorner.com:

The watchword for 2018 is: UNHINGED!

That refers to Wall Street, Washington, the Dems and the GOP, and all the far and near corners of the planet which are implicated in their collective follies.

The latter begins with the fact that Imperial Washington has become so dysfunctional that the most powerful government on earth can’t seem to keep its doors open for more than a few weeks at a time.

The next continuing resolution (CR) deadline is January 19 and the route thereto resembles nothing less than kick-the-can-alley. It’s strewn with $100 billion of unfunded disaster aid, defense and nondefense sequester caps fixing to be busted by another $100 billion, 700,000 dreamers waiting to be deported, 9 million poor children (CHAPS) facing termination of medical care and millions more ObamaCare recipients who have been promised that cost abatement subsidies to insurance companies will be funded forthwith.

And along with those major bouncing cans are countless more articles of graft and booty cued-up on Capitol Hill looking for a legislative gravy train (i.e. CR) to hop aboard.

Likewise, the casino gamblers on Wall Street complacently attempt to tag another record at 2700 on the S&P 500. Yet that would represent a nosebleed 25X LTM earnings heading into a bond market rout that is certain to result from soaring treasury issuance and the Fed’s impending bond dump-a-thon.

Worse still, the Donald insouciantly unleashes tweet storms about the alleged Trumpian boom when the next recession is statistically just around the corner. After all, the current so-called recovery will pass the existing 118 month record, which occurred under the far more propitious circumstances of the 1990s, in April 2019.

But when it comes to Unhinged, nothing tops the GOP’s disgraceful plunge into fiscal turpitude. The once and former party of fiscal rectitude and a constitutionally required balanced budget has unleashed a torrent of red ink, which under the circumstances, makes Barack Obama’s profligacy pale by comparison.

To continue reading: Unhinged, Part 1: The GOP’s Fiscal Madness

 

The Greatest Bubble Ever: Why You Better Believe It, by David Stockman

Here is David Stockman’s analysis of the US government’s spending, receipts, and the overall economy. From Stockman at davidstockmanscontracorner.com:

Part Two:

As we explained in Part 1, the most dangerous place on the planet financially is now the Wall Street casino. In the months ahead, it will become ground zero of the greatest monetary/fiscal collision in recorded history.

For the first time ever both the Fed and the US treasury will be dumping massive amounts of public debt on the bond market—upwards of $1.8 trillion between them in FY 2019 alone—and at a time which is exceedingly late in the business cycle. That double whammy of government debt supply will generate a thundering “yield shock” which, in turn, will pull the props out from under equity and other risk asset markets—-all of which have “priced-in” ultra low debt costs as far as the eye can see.

The anomalous and implicitly lethal character of this prospective clash can not be stressed enough. Ordinarily, soaring fiscal deficits occur early in the cycle. That is, during the plunge unto recession, when revenue collections drop and outlays for unemployment benefits and other welfare benefits spike; and also during the first 15-30 months of recovery, when Keynesian economists and spendthrift politicians join hands to goose the recovery—-not understanding that capitalist markets have their own regenerative powers once the excesses of bad credit, malinvestment and over-investment in inventory and labor which triggered the recession have been purged.

By contrast, the Federal deficit is now soaring at the tail end (month #102) of an aging business expansion. And the cause is not the exogenous effects of so-called automatic fiscal stabilizers associated with a macroeconomic downturn, but deliberate Washington policy decisions made by the Trumpian GOP.

During FY 2019, for example, these discretionary plunges into deficit finance include slashing revenue by $280 billion, while pumping up an already bloated baseline spending level of $4.375 trillion by another $200 billion for defense, disasters, border control, ObamaCare bailouts and domestic pork barrel of every shape and form.

These 11th hour fiscal maneuvers, in fact, are so asinine that the numbers have to be literally seen to be believed. To wit, an already weak-growth crippled revenue baseline will be cut to just $3.4 trillion, while the GOP spenders goose outlays toward the $4.6 trillion mark.

That’s right. Nine years into a business cycle expansion, the King of Debt and his unhinged GOP majority on Capitol Hill have already decided upon (an nearly implemented) the fiscal measures that will result in borrowing 26 cents on every dollar of FY 2019 spending. JM Keynes himself would be grinning with self-satisfaction.

Moreover, this foolhardy attempt to re-prime-the-pump nearly a decade after the Great Recession officially ended means that monetary policy is on its back foot like never before.

 

SWAMP PEOPLE: 47; TRUMP: 0, by Ann Coulter

There is no difference between this year’s budget fiasco and those of the last couple of decades. There’s also no money for a wall on the southern border. From Ann Coulter, at coulter.com:

If this is the budget deal we get when Republicans control the House, the Senate and the presidency, there’s no point in ever voting for a Republican again.

Not only is there no funding for a wall, but — thanks to the deft negotiating skills of House Speaker Paul Ryan — the bill actually prohibits money from being spent on a wall.

At a CYA press conference on Tuesday, Trump’s ridiculously chipper budget director, Mick Mulvaney, described the bill’s prohibition on building a wall as a MAJOR win. (At least Mulvaney said it in English, unlike his all-Spanish 2014 townhall.)

True, there will be no wall. But the Democrats graciously agreed to allow the administration to fix broken parts of any existing fences on up to 40 miles of our 3,000 mile border.

The other big wins, according to Mulvaney, are:

1) more defense spending, which is fantastic news, because I was worried Boeing and Lockheed Martin CEOs were falling behind Mark Zuckerberg with their gluttonous salaries; and

2) school choice, an obsession of Washington wonks that is hated out in America, where parents move to high-tax towns for the express purpose of avoiding schools full of disaffected urban youth, and the disaffected urban youth don’t want to spend two hours on a bus every day.

But Mulvaney assures us that this monstrosity of a spending bill has set things up beautifully for the next budget negotiation in October.

That has become the GOP’s official motto: “Next time!”

We can never win this time. Instead, Republicans’ idea is always to surrender this time, in hopes that their gentlemanliness will be rewarded by their mortal enemies next time. Then, next time comes, and Republicans again surrender in hopes of currying favor with the Democrats and the media for the next time.

To continue reading: SWAMP PEOPLE: 47; TRUMP: 0

Rand Paul Goes Off On Republican Party Over New Budget Resolution, by Joseph Jankowski

In terms of fiscal practices, Republican congress critters are no different from their Democratic counterparts: they spend a lot more than they take in. Rand Paul is trying to shame them into changing their ways. Good luck. From Joseph Jankowski at planetfreewill.com:

On Wednesday afternoon, one day after reintroducing his Federal Reserve Transparency Act, Senator Rand Paul (R-KY) took to the Senate floor to slam his fellow Republicans for the $9.7 trillion of debt that a newly introduced budget resolution will tack on to the countries already out of control debt total.

Senate Budget Committee Chair Michael Enzi (R-WY) introduced a budget resolution on Tuesday that is being touted as the first step the newly sworn in congress is taking to repealing Obamacare. The legislation includes “reconciliation instructions” that would allow congress to dismantle the health care law as part of reconciling taxes and spending with the budget blueprint.

According to Paul, “there is a time and a place to debate Obamacare” but this new piece of legislation is a budget and he is unwilling to support the debt it will accumulate.

“Republicans won the White House. Republicans control the Senate. Republicans control the House. And what will the first order of business be for the new Republican majority?” Paul asked.

“To pass a budget that never balances,” the Kentucky Senator answered his own question. “To pass a budget that will add $9.7 trillion dollars of new debt in tens years.”

“Is that really what we campaigned on?” Paul asked on. “Is that really what the Republican party represents?”

After stating that he is with his fellow Republicans for the repeal of Obamacare, Senator Paul went on to ask “why should we vote on a budget that doesn’t represent our conservative view?”

To continue reading: Rand Paul Goes Off On Republican Party Over New Budget Resolution

The Republican Budget Is a Deficit Bust, by Mick Mulvaney

Democrats put social spending on the credit card. As Mick Mulvaney, a Republican congressman from South Carolina, notes rather acidly, the Republicans want to pay for the military with plastic, too. From Congressman Mulvaney, in a Wall Street Journal commentary, “The Republican Budget Is a Deficit Bust,” 3/30/15, an unusual burst of honesty from a politician:

Last week Republicans in the House and Senate passed budgets that took the Budget Control Act of 2011 and threw it out the window. Many defense hawks think this was a win. The truth is that the GOP lost.

As recently as the summer of 2011, debt and deficits were all the rage. Even the most strident Republican defense hawks were reeling from dire warnings from the Pentagon that, as then-Joint Chiefs of Staff Chairman Mike Mullen put it, the “most significant threat to our national security is our debt.”

So in August of that year, my fellow Republicans and I declared to the American people that we would raise the debt ceiling only as part of a larger agreement to reduce future growth in spending. “We will spend the money now,” we declared, “but we promise to save it later.” That commitment was embodied in the Budget Control Act, which set spending caps on defense and nondefense spending. It became the law of the land. It still is.

Four years on, debt and deficits are passé, and the deficit is only a third of what it was just five years ago. Never mind that this year’s deficit will be the sixth-largest in history—exceeded only by the previous five—or that the national debt has ballooned by $3 trillion in that time. Today beheadings and racial tension grab the headlines.

With fiscal concerns no longer in vogue, House Republicans broke the statutory caps of the Budget Control Act and did so in a way that wasn’t honest. Instead of making the arguments for changing the law, the House budget used an off-budget fund, the Overseas Contingency Operations (OCO) budget, to increase military spending.

The OCO should trouble Republicans. The so-called war budget, set up when the U.S. invaded Afghanistan in 2001, has been decried for years as a slush fund, and rightly so. No less a defense hawk than Sen. John McCain has called it a gimmick. The OCO is perhaps the worst way to fund the military. It lacks oversight and accountability within a Pentagon already famous for its inability to know where the money is going.

By far the largest objection is that this additional military spending isn’t “paid for.” That was no accident. Defense hawks lobbied against any budget that would offset additional military spending with cuts elsewhere. That willful decision to avoid making hard fiscal decisions forced many deficit hawks to abandon the budget. Many of us supported an alternative that provided almost the same military funding but paid for the extra spending with reductions elsewhere. That alternative got 105 votes in the House, fewer than half of Republicans.

There is no honest way to justify not paying for spending, no matter how often my fellow Republicans try. The same defense hawks who voted for the spending caps originally now say “the world is a different place.”

No it isn’t. Today we have Islamic State militants controlling parts of Syria and Iraq, Russia threatening Ukraine, and Iran pursuing nuclear weapons. Is that really so different than 2011, when the Arab Spring was destabilizing the Arab world, Bashar Assad was gassing his own people in a torrid Syrian civil war, and Iran was pursuing nuclear weapons?

The world will always be a dangerous place. Which is why we need a strong military. All Republicans agree on that. Period. The story behind the GOP budget has little to do with defending the nation. It has everything to do with the deficit. Put another way: All Republicans want a strong military; not all of us want to pay for it.

“Freedom isn’t free,” Sen. McCain tweeted at fiscal conservatives before the Senate passed a budget using the same gimmick as did the House. Our response: We agree with you, senator. It’s not free. So let’s pay for it. What House and Senate budgets tell people is this: “Defense is important, but let’s borrow the money and let our children pay for it.” That isn’t courage, but the opposite.

Until this budget, Republicans were beginning to convince people that they were serious about reducing spending. GOP budgets in recent years have made hard decisions on everything from defense to Medicare to food stamps. Republicans had begun making the argument that all spending is subject to scrutiny. Now there is a new message: Republicans will cut things they don’t like, but they lack that same conviction on things they like.

Because of the hard decisions that defense hawks and deficit hawks had made together, Republicans were gaining the moral high ground on spending. Last week we lost it, and it will be harder to regain the next time.

Then again, who knows? This fall the debt ceiling will need to be raised again.

http://www.wsj.com/articles/mick-mulvaney-the-republican-budget-is-a-deficit-bust-1427662664?KEYWORDS=Mick+Mulvaney