Tag Archives: National Debt

The US Government Is On Track to Top Last Year’s Record-Breaking Deficits, by Ryan McMaken

The US government goes from new high to newer high in deficits. The chances it will ever repay its debt with dollars whose value is anything approaching the value of dollars today is infinitesimal. From Ryan McMaken at mises.org:

The Treasury department has issued its spending and revenue report for April 2021, and it’s clear the US government is headed toward another record-breaking year for deficits.

According to the report, the US federal government collected $439.2 billion in revenue during April 2021, which was a sizable improvement over April 2020 and over March 2021. Indeed, April 2021’s revenue total was the largest since July of last year when the federal government collected 563.5 billion following several months of delays on tax filing deadlines beyond the usual April 15 deadline. (Not surprisingly, in most years, April tends to be the federal government’s biggest month for tax collections.)

In spite of April’s haul, however, the federal government managed to spend much more than that, with spending topping $664 billion during April. This means the federal government ran a sizable deficit in April of 225.6 billion. This was a middling sum compared to other monthly deficits this fiscal year (which began on October 1), but deficits are adding up fast.

For the first seven months of this fiscal year combined, the US government collected $2.1 trillion in revenue, yet it spend nearly twice as much: $4.1 trillion, or 90 percent more than it collected.

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Unconstitutional Debt and Future Generations, by Andrew P. Napolitano

Not the least of the national debt’s many vices is that it’s blatantly unconstitutional. From Andrew P. Napolitano at lewrockwell.com:

Earlier this week, President Joseph R. Biden Jr. asked Congress to raise taxes and increase borrowing so his administration can spend $2.3 trillion — on top of the $1.9 trillion Congress authorized two months ago for so-called COVID relief — for thousands of projects he calls “infrastructure.” All this is in addition to the $2 trillion that the government borrows annually these days just to make ends meet.

These are serious numbers of dollars, the repayment of which will have seriously unpleasant consequences for future generations of Americans. Indeed, under Biden’s administration, the feds will borrow three times what they collect in taxes. This is not a new phenomenon, but it exacerbates the modern trend of spend now and pay later.

Under the Constitution, can the feds borrow as much as they want and can they spend it on anything they want? Here is the backstory.

When James Madison and his colleagues wrote the Constitution, they addressed the problem of debt. They knew governments borrow vast amounts of money to address emergencies, usually wars — as the 13 colonies had just done. When Madison and his colleagues were deciding upon the powers of the new federal government, they included the power to borrow money but excluded the power to create and operate a bank.

Madison understood that the Constitution limited the power of Congress to spend monies — whether obtained by taxes or debt — to the 17 discrete areas of governance delegated to the federal government in the Constitution.

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Some clear thinking on the yesterday’s massive deficit announcement, by Simon Black

They have a name for countries where the government’s central bank is the largest buyer of the government’s debt: banana republics. From Simon Black at sovereignman.com:

Every single month, the US Treasury Department is legally obliged to publish monthly financial statements to the public.

This is typically a pretty boring ritual which attracts minimal fanfare; few people pay attention, or even care to look at the federal government’s accounting of its assets, liabilities, income and expenses.

Yet yesterday’s financial statements were pretty groundbreaking, as they showed that the US federal government deficit so far this fiscal year is an astonishing $1.7 trillion.

Bear in mind we’re only halfway through the fiscal year (which began in October 2020). So there’s a lot more red ink to follow.

That $1.7 trillion deficit figure doesn’t even include a lot of recent and pending legislation, including COVID relief, infrastructure, and all the other fantasy spending bills the Bolsheviks are putting forward.

Now, rather than focus on the headline figure, I’d like to take you on a quick tour of the federal debt today and have an objective discussion of what lies ahead.

First off, it’s important to understand that when the federal government goes into debt, it does so by issuing bonds; bonds are financial securities (like stocks) which entitle the holder to be repaid with interest.

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Financial Tyranny: Footing the Tax Bill for the Government’s Fiscal Insanity, by John W. Whitehead and Nisha Whitehead

Mountains of debt imposed by a government on present and future taxpayers is a form of tyranny. From John W. Whitehead and Nisha Whitehead at rutherford.org:

“We are now speeding down the road of wasteful spending and debt, and unless we can escape we will be smashed in inflation.”—Herbert Hoover

We’re not living the American dream. We’re living a financial nightmare.

The U.S. government—and that includes the current administration—is spending money it doesn’t have on programs it can’t afford, and “we the taxpayers” are the ones who will be forced to foot the bill for the government’s fiscal insanity.

We’ve been sold a bill of goods by politicians promising to pay down the national debt, jumpstart the economy, rebuild our infrastructure, secure our borders, ensure our security, and make us all healthy, wealthy and happy.

None of that has come to pass, and yet we’ve still been loaded down with debt not of our own making.

This financial tyranny works the same whether it’s a Democrat or Republican at the helm.

Let’s talk numbers, shall we?

The national debt (the amount the federal government has borrowed over the years and must pay back) is $28 trillion and growing. That translates to roughly $224,000 per taxpayer.

The government’s answer to the COVID-19 pandemic has been to throw more money at the problem in the form of stimulus checks, small business loans, unemployment benefits, vaccine funding, and financial bailouts for corporations. All told, the federal government’s COVID-19 spending has exceeded $4 trillion.

The Biden administration is proposing another $2 trillion in infrastructure spending.

The amount this country owes is now greater than its gross domestic product (all the products and services produced in one year by labor and property supplied by the citizens). And the top two foreign countries who “own” about a third of our debt are China and Japan.

That debt is also growing exponentially: it is expected to be twice the size of the U.S. economy by 2051.

Essentially, the U.S. government is funding its very existence with a credit card.

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28 trillion reasons to have a Plan B, by Simon Black

The US government and its central bank are just going to keep issuing debt until markets stop them from doing so. From Simon Black at sovereignman.com:

At the close of business on Monday March 1st, just a few days ago, the US national debt crossed $28 trillion for the first time in history.

To the penny, in fact, the national debt hit $28,004,376,276,999.35.

And bear in mind that figure doesn’t include the $1.9 trillion in ‘Covid stimulus’ that Uncle Sam is about to pass, let alone all the other deficit spending that they were already expecting for this current fiscal year.

So you can already see how the debt will quickly rocket past $30 trillion in no time at all.

It’s noteworthy that it took the United States more than two centuries to accumulate its first trillion dollars in debt– a milestone first reached on October 22, 1981.

In those two centuries (74,984 days, to be exact), the US fought two world wars, battled the Spanish Flu pandemic, dealt with the Great Depression, waged Cold War against the Soviet Union, fought the Civil War against itself, put a man on the moon, etc. before breaching $1 trillion in debt.

This most recent trillion of debt took a mere 152 days to accumulate.

Think about that: nearly 75,000 days for the first trillion, 152 days for the last trillion.

Even more startling, it was only September 2017 that the national debt first crossed the $20 trillion milestone.

So when the debt undoubtedly hits $30 trillion over the next few months, that means it will have grown $10 trillion in less than four years.

And there is absolutely no end in sight. The Treasury Department and the Federal Reserve are both in lockstep fanaticism: no amount of debt is too much, no amount of money printing is too much.

They find it perfectly logical for the government to restrain large portions of the economy and provide financial incentives for people to be economically unproductive, but then make up the difference by printing money and going into debt.

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The Great Egghead Caper, by MN Gordon

There is no idea so stupid that some professor or other esteemed intellectual won’t believe it. From MN Gordon at economicprism.com:

“Where the hell are we?” – President Joe Biden, February 16, 2021

Highway to Hell

The President asked a most important question.  So we’ll offer the puzzled fellow an answer…

We – as in the USA – are hurtling down the highway to hell.  The state of the union is chaos.  America’s finances are completely out of control.

Spending is rapidly outpacing revenue.  Debts and deficits are mushrooming like mold spores on wet drywall.  Rot and decay have set in.  The nation’s structural foundations have fallen into irreversible disrepair.

Don’t believe us?

According to the recently published Congressional Budget Office (CBO), Budget and Economic Outlook: 2021 to 2031, America’s broker than broke.  For example, the CBO projects a federal budget deficit of $2.3 trillion in 2021.  At 10.3 percent of gross domestic product (GDP), the deficit in 2021 would be the second largest since 1945, exceeded only by the 14.9 percent shortfall recorded last year.

The CBO projects federal debt held by the public will reach 102 percent of GDP at the end of 2021, and more than 107 percent of GDP by the end of 2031.  And as the Committee for a Responsible Federal Budget clarifies, the CBO’s report shows:

“Four major trust funds are on a path toward insolvency.  CBO projects Highway Trust Fund insolvency in FY 2022, Medicare Hospital Insurance trust fund insolvency in FY 2026.  Social Security Old Age and Survivors Insurance trust fund insolvency appears likely in calendar year 2032 and Social Security Disability Insurance trust fund insolvency in the mid-2030s.

“Debt could be even higher than projected. If policymakers enact $2 trillion of additional fiscal relief, extend expiring tax provisions, and grow annual appropriations with GDP, debt would total 120 percent of GDP by 2031.”

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Election – The Winning Manifesto, by Egon von Greyerz

How many times did you hear either presidential candidate say the word “debt”? The most crucial issue of all was the great unmentionable. From Egon von Greyerz at goldswitzerland.com:

The US election has finally taken place. During the campaign, both candidates have totally avoided the critical issue that will bring the US down in the next four years. The election campaign has been ugly but totally avoided the monumental problem facing the American people.

Clearly neither of them wanted to tell the voters that he will take over the running of a totally bankrupt country that is likely to collapse economically, financially and morally in the next four years.

At the end of this article I have set out what would have been the winning election manifesto.

A PRESIDENTIAL CANDIDATE NEVER TELLS THE TRUTH

Neither Trump, nor Biden has been telling the American people that the US is a totally bankrupt country that has been running deficits for 90 years. (Four small exceptions in the 1940s and 50s. The Clinton surpluses were fake.)

What an unenviable task to preside over an insolvent nation and be hated by everyone as the country falls into perdition.

How can anyone be willing to run a nation that needs to borrow half of its budget expenditure. The clear facts are on the table. You cannot erase 90 years of mismanagement.

The figures tell us the truth. In fiscal 2020 spending was $6.6 trillion and tax revenue $3.4t. So the deficit was a staggering $3.2t. And as history shows us, it can only get worse. The state of the financial system, exacerbated by Covid, guarantees galloping deficits from hereon in.

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Can America Do It All? by Patrick J. Buchanan

The short answer is no. From Patrick J. Buchanan at buchanan.org:

In fiscal year 2020, which ended on Sept. 30, the U.S. government set some impressive new records.

The deficit came in at $3.1 trillion, twice the previous record of $1.4 trillion in 2009, which was set during the Great Recession, and three times the 2019 deficit of about $1 trillion.

Federal spending hit $6.5 trillion, one-third of U.S. gross domestic product, a share unrivaled except for the later years of World War II when federal spending exceeded 40% of GDP.

The U.S. national debt, $14 trillion when Donald Trump took office, now stands at $21 trillion, roughly the same size as U.S. GDP.

In fiscal year 2021, the deficit could be of the same magnitude as 2020.

Why so? First, the economy is not fully recovered from the 2020 depression. Unemployment is still near 8%. Nancy Pelosi has already proposed $2.2 trillion in new spending to battle the effects of the coronavirus pandemic in the first month of this fiscal year. And COVID-19 cases are spiking again.

With the national debt already equal to the GDP, and growing faster now, a question arises: Where does this end?

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Debt is the Real Pandemic, by Ron Paul

Long after coronavirus is but a memory, our children and grandchildren will be paying for it. From Ron Paul at ronpaulinstitute.org:

According to the Congressional Budget Office’s (CBO) latest “Update on the Budget Outlook,” this year’s $3.3 trillion federal deficit is not just three times larger than last year: it is the largest federal deficit in history. The CBO update also predicts that the federal debt will equal 104 percent of the gross domestic product (GDP) next year and will reach 108 percent of GDP by 2030.

The CBO update also shows that the Social Security, Medicare, and highway trust funds will all be bankrupt by 2031. This will put pressure on Congress to bail out the trust funds thus further increasing the debt.

This year’s spike in federal spending was caused by the multi-trillion dollar coronavirus relief/economic stimulus bills passed by Congress and signed by the president. However, spending had already increased by $937 billion from the time President Trump was sworn in until the lockdown.

Federal spending is unlikely to be reduced no matter who wins the presidential election. Former Vice President Joe Biden has proposed increasing spending on everything from Obamacare to militarism to “green” cronyism. Yet some progressives are attacking Biden for being to “stingy” in his spending proposals. Even more distressing is how few progressives are critical of Biden’s support for increasing the military budget.

With some notable exceptions, such as his infrastructure plan, President Trump is not proposing any massive new spending programs. However, he Is not promising to stop increasing, much less cut, federal spending.

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Since 9/11, the Government’s Answer to Every Problem Has Been More Government, by John Whitehead

It’s a cycle: problem→government→government makes problem worse→more government→and so on. From John Whitehead at rutherford.org:

“A government big enough to give you everything you want is a government big enough to take away everything that you have.”—Anonymous

Have you noticed that the government’s answer to every problem is more government—at taxpayer expense—and less individual liberty?

The Great Depression. The World Wars. The 9/11 terror attacks. The COVID-19 pandemic.

Every crisis—manufactured or otherwise—since the nation’s early beginnings has become a make-work opportunity for the government to expand its reach and its power at taxpayer expense while limiting our freedoms at every turn.

Indeed, the history of the United States is a testament to the old adage that liberty decreases as government (and government bureaucracy) grows. To put it another way, as government expands, liberty contracts.

To the police state, this COVID-19 pandemic has been a huge boon, like winning the biggest jackpot in the lottery. Certainly, it will prove to be a windfall for those who profit from government expenditures and expansions.

Given the rate at which the government has been devising new ways to spend our money and establish itself as the “solution” to all of our worldly problems, this current crisis will most likely end up ushering in the largest expansion of government power since the 9/11 terrorist attacks.

This is how the emergency state operates, after all.

From 9/11 to COVID-19, “we the people” have acted the part of the helpless, gullible victims desperately in need of the government to save us from whatever danger threatens. In turn, the government has been all too accommodating and eager while also expanding its power and authority in the so-called name of national security.

As chief correspondent Dan Balz asks for The Washington Post, “Government is everywhere now. Where does it go next?

When it comes to the power players that call the shots, there is no end to their voracious appetite for more: more money, more power, more control.

This expansion of government power is also increasing our federal debt in unprecedented leaps and bounds. Yet the government isn’t just borrowing outrageous amounts of money to keep the country afloat. It’s also borrowing indecent sums to pay for programs it can’t afford.

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