FEDERAL DEBT PRIMED TO EXPLODE...

[enhanced_deficit]

From Drudge:

[SIZE=+7]FEDERAL DEBT PRIMED TO EXPLODE...

Trillion-dollar deficits come roaring back...[/SIZE]

The GOP tax plan means short-term gains for the economy, but federal debt is primed to explode, CBO analysis says

• The Congressional Budget Office forecast that the new tax law will generate an average of 0.7 percent growth over the decade and create 1.1 million jobs.
• However, larger budget deficits would crowd out private investment in later years, dampening economic growth.
• As a result, the CBO estimated the cumulative deficit over the next decade will be $1.6 trillion larger than previously projected. By 2028, the national debt would total 96 percent of GDP.

Ylan Mui | @ylanmui

Published 5 Hours Ago Updated 1 Hour Ago

CBO: Tax law will add $1.9 trillion to deficit over a decade 3 Hours Ago | 02:15

The Republican overhaul of America's tax code and increased government spending are projected to boost economic growth to 3.3 percent this year but push the national debt to nearly the same size as gross domestic product by 2028, according to government data released Monday.

The Congressional Budget Office forecast that the new tax law will generate an average of 0.7 percent growth over the decade and create 1.1 million jobs. It also predicted the two-year federal spending deal would increase GDP by 0.3 percent this year and 0.6 percent in 2019. However, larger budget deficits would crowd out private investment in later years, dampening economic growth.
As a result, the CBO estimated the cumulative deficit over the next decade will be $1.6 trillion larger than previously projected. By 2028, the national debt would total 96 percent of GDP.
"Such high and rising debt would have serious negative consequences for the budget and for the nation," the CBO report said.





Related

[h=1]National debt hits $21 trillion[/h]

 

[econ4every1]

From Drudge:

[SIZE=+7]FEDERAL DEBT PRIMED TO EXPLODE...[/SIZE]

[SIZE=+7]

Wow, that sounds scary. Kind of like a "ticking time bomb"?

Here is a list of similar claims going back to the 1940's of the same sorts of dire predictions. It's been 78 years, do you really think that it's for real this time?

[/SIZE]Sept 26, 1940, New York Times: Deficit Financing is Hit by Hanes: ” . . . unless an end is put to deficit financing, to profligate spending and to indifference as to the nature and extent of governmental borrowing, the nation will surely take the road to dictatorship, Robert M. Hanes, president of the American Bankers Association asserted today. He said, “insolvency is the time-bomb which can eventually destroy the American system . . . the Federal debt . . . threatens the solvency of the entire economy.”Feb 11, 1960, New York Times: Mueller Assails Rise in Spending: The enormous cost of various Federal programs is a time bomb, threatening the country’s fiscal future, Secretary of Commerce, Frederick H. Mueller warned here today “. . . the accrued liability is a ticking time bomb. Someday someone will have to pay.”

Oct 4, 1983 Evening Independent – The United States and the developed world face a “ticking time bomb” because of the huge foreign debt involving loans to Third World nations

Oct 26, 1983, David Ibata: “ . . . home-building officials called for a commission to propose ways to trim the $200 billion federal deficit. The deficit is a ‘ticking time bomb‘ that probably will explode in the third quarter of 1984,’ said Fred Napolitano, former president of the National Association of Home Builders.

Feb 21, 1984, James Warren: “‘We now hear from them (the Reagan administration) that deficits don’t cause high-interest rates and inflation,’ AFL-CIO President Lane Kirkland said. ‘If that’s the case, we’ve suddenly discovered the horn of plenty and should stop worrying and keep borrowing and spending. But I don’t believe it. It’s a time bomb ticking away.”

January 12, 1985, Lexington Herald-Leader (KY): The federal deficit is “a ticking time bomb, and it’s about to blow up,” U.S. Sen. Mitch McConnell, a Louisville Republican, said yesterday.

Feb 17, 1985, Los Angeles Times: We labeled the deficit a `ticking time bomb‘ that threatens to permanently undermine the strength and vitality of the American economy.”

Jan 5, 1987, Richmond Times-Dispatch – Richmond, VA: 100TH CONGRESS FACING U.S. DEFICIT ‘TIME BOMB‘
November 28, 1987, The Dallas Morning News: THE TICKING TIME BOMB OF LONG-TERM HEALTH CARE COSTS A fiscal time bomb is slowly ticking that, if not defused, could explode into a financial crisis within the next few years for the federal government and our nation’s elderly. The ticking bomb is the growing cost of long-term care.
October 23, 1989, FORTUNE Magazine: A TIME BOMB FOR U.S. TAXPAYERS The government guarantees millions of mortgages, bonds, deposits, and student loans. These liabilities, now twice the national debt, are growing fast.

May 1, 1992, The Pantagraph – Bloomington, Illinois: I have seen where politicians in Washington have expressed little or no concern about this ticking time bomb they have helped to create, that being the enormous federal budget deficit, approaching $4 trillion and growing now at an annual rate of $400 billion per year.
October 28, 1992: Ross Perot: “Our great nation is sitting right on top of a ticking time bomb. We have a national debt of $4 trillion. Seventy-five percent of this debt is due and payable in the next five years. This is a bomb that’s set to go off and devastate our economy and destroy thousands of jobs.

Dec 3, 1995, Kansas City Star: Deficit is sapping America’s strength. Concerned citizens. . . regard the national debt as a ticking time bomb poised to explode with devastating consequences at some future date.

April 14, 2003: Porter Stansberry, for the Daily Reckoning: The baby boomers are heading into retirement with no savings and no productive companies to support them in old age. Generation debt is a ticking time bomb…with about ten years left on the clock.
October 1, 2004, Bradenton Herald: A NATION AT RISK: TWIN DEFICIT A TICKING TIME BOMB: Lawmakers approved Bush’s request without cutting federal spending by a penny, thereby fattening the country’s projected record deficit of $422 billion by another $145 billion next year.

May 31, 2005, Providence Journal, Defusing the Medicare time bomb, Some lawmakers see the Medicare drug benefit for what it is: a ticking time bomb, set to wreak havoc on the budget and shoot future tax rates sky-high.

April 5, 2006, NewsMax.com, “We have to worry about the deficit . . . when we combine it with the trade deficit we have a real ticking time bomb in our economy,” said Mrs. Clinton.

Dec 3, 2007, USA Today: US debt: $30,000 per American. WASHINGTON (AP): Like a ticking time bomb, the national debt is an explosion waiting to happen.

September 24, 2010, Email from the Reason Alert: ” . . . the time bomb that’s ticking under the federal budget like a Guy Fawkes’ powder keg.”

July 7, 2011, Washington Post, Lori Montgomery: ” . . . defuse the biggest budgetary time bombs that are set to explode as the cost of health care rises and the nation’s population ages.

If the debt is a "time bomb" that's going to "explode", it surely has the slowest fuse in history. The pundits have been wrong, wrong, wrong, all these years. We should understand federal deficits, even large federal deficits, have not caused inflation or any other negative economic effect, and the debt is not a ticking time bomb? It’s an economic necessity. Let us turn away from faith and start to rely on facts.

The Republican overhaul of America's tax code and increased government spending are projected to boost economic growth to 3.3 percent this year but push the national debt to nearly the same size as gross domestic product by 2028, according to government data released Monday.

There is a problem with this assumption. Future spending=future income. Whatever the debt ends up being will add to future income. Future income will lead to future spending. The only question is, will the real labor and resources exist to meet whatever level of demand that future consumers place on the economy.

The Congressional Budget Office forecast that the new tax law will generate an average of 0.7 percent growth over the decade and create 1.1 million jobs. It also predicted the two-year federal spending deal would increase GDP by 0.3 percent this year and 0.6 percent in 2019. However, larger budget deficits would crowd out private investment in later years, dampening economic growth.
As a result, the CBO estimated the cumulative deficit over the next decade will be $1.6 trillion larger than previously projected. By 2028, the national debt would total 96 percent of GDP.
"Such high and rising debt would have serious negative consequences for the budget and for the nation," the CBO report said.

The CBO is wrong.

 

[Zippyjuan]

Those darned tax and spend liberals ringing up debt right and left! Wait- this was the cut taxes and spend Republicans bringing back the $trillion deficits.

 

[NorthCarolinaLiberty]

[Wow, that sounds scary.

Yeah, it's so scary that the prescription follows immediately after that article you posted:

The most important problems in economics involve the excessive income/wealth/power Gaps between the have-mores and the have-less.

Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.

Implementation of The Ten Steps To Prosperity can narrow the Gaps:



Ten Steps To Prosperity:

1. ELIMINATE FICA (Ten Reasons to Eliminate FICA )
Although the article lists 10 reasons to eliminate FICA, there are two fundamental reasons:
*FICA is the most regressive tax in American history, widening the Gap by punishing the low and middle-income groups, while leaving the rich untouched, and
*The federal government, being Monetarily Sovereign, neither needs nor uses FICA to support Social Security and Medicare.
2. FEDERALLY FUNDED MEDICARE [/B]— PARTS A, B & D, PLUS LONG TERM CARE — FOR EVERYONE (H.R. 676, Medicare for All )
This article addresses the questions:
*Does the economy benefit when the rich can afford better health care than can the rest of Americans?
*Aside from improved health care, what are the other economic effects of “Medicare for everyone?”
*How much would it cost taxpayers?
*Who opposes it?”
3. PROVIDE A MONTHLY ECONOMIC BONUS TO EVERY MAN, WOMAN AND CHILD IN AMERICA (similar to Social Security for All) (The JG (Jobs Guarantee) vs the GI (Guaranteed Income) vs the EB (Economic Bonus)) Or institute a reverse income tax.
This article is the fifth in a series about direct financial assistance to Americans:

Why Modern Monetary Theory’s Employer of Last Resort is a bad idea. Sunday, Jan 1 2012
MMT’s Job Guarantee (JG) — “Another crazy, rightwing, Austrian nutjob?” Thursday, Jan 12 2012
Why Modern Monetary Theory’s Jobs Guarantee is like the EU’s euro: A beloved solution to the wrong problem. Tuesday, May 29 2012
“You can’t fire me. I’m on JG” Saturday, Jun 2 2012

Economic growth should include the “bottom” 99.9%, not just the .1%, the only question being, how best to accomplish that. Modern Monetary Theory (MMT) favors giving everyone a job. Monetary Sovereignty (MS) favors giving everyone money. The five articles describe the pros and cons of each approach.
4. FREE EDUCATION (INCLUDING POST-GRAD) FOR EVERYONE Five reasons why we should eliminate school loans
Monetarily non-sovereign State and local governments, despite their limited finances, support grades K-12. That level of education may have been sufficient for a largely agrarian economy, but not for our currently more technical economy that demands greater numbers of highly educated workers.
Because state and local funding is so limited, grades K-12 receive short shrift, especially those schools whose populations come from the lowest economic groups. And college is too costly for most families.
An educated populace benefits a nation, and benefitting the nation is the purpose of the federal government, which has the unlimited ability to pay for K-16 and beyond.
5. SALARY FOR ATTENDING SCHOOL
Even were schooling to be completely free, many young people cannot attend, because they and their families cannot afford to support non-workers. In a foundering boat, everyone needs to bail, and no one can take time off for study.
If a young person’s “job” is to learn and be productive, he/she should be paid to do that job, especially since that job is one of America’s most important.
6. ELIMINATE FEDERAL TAXES ON BUSINESS
Businesses are dollar-transferring machines. They transfer dollars from customers to employees, suppliers, shareholders and the federal government (the later having no use for those dollars). Any tax on businesses reduces the amount going to employees, suppliers and shareholders, which diminishes the economy. Ultimately, all business taxes reduce your personal income.
7. INCREASE THE STANDARD INCOME TAX DEDUCTION, ANNUALLY. (Refer to this.) Federal taxes punish taxpayers and harm the economy. The federal government has no need for those punishing and harmful tax dollars. There are several ways to reduce taxes, and we should evaluate and choose the most progressive approaches.
Cutting FICA and business taxes would be a good early step, as both dramatically affect the 99%. Annual increases in the standard income tax deduction, and a reverse income tax also would provide benefits from the bottom up. Both would narrow the Gap.
8. TAX THE VERY RICH (THE “.1%) MORE, WITH HIGHER PROGRESSIVE TAX RATES ON ALL FORMS OF INCOME. (TROPHIC CASCADE)
There was a time when I argued against increasing anyone’s federal taxes. After all, the federal government has no need for tax dollars, and all taxes reduce Gross Domestic Product, thereby negatively affecting the entire economy, including the 99.9%.
But I have come to realize that narrowing the Gap requires trimming the top. It simply would not be possible to provide the 99.9% with enough benefits to narrow the Gap in any meaningful way. Bill Gates reportedly owns $70 billion. To get to that level, he must have been earning $10 billion a year. Pick any acceptable Gap (1000 to 1?), and the lowest paid American would have to receive $10 million a year. Unreasonable.
9. FEDERAL OWNERSHIP OF ALL BANKS (Click The end of private banking and How should America decide “who-gets-money”?)
Banks have created all the dollars that exist. Even dollars created at the direction of the federal government, actually come into being when banks increase the numbers in checking accounts. This gives the banks enormous financial power, and as we all know, power corrupts — especially when multiplied by a profit motive.
Although the federal government also is powerful and corrupted, it does not suffer from a profit motive, the world’s most corrupting influence.
10. INCREASE FEDERAL SPENDING ON THE MYRIAD INITIATIVES THAT BENEFIT AMERICA’S 99.9% (Federal agencies)Browse the agencies. See how many agencies benefit the lower- and middle-income/wealth/ power groups, by adding dollars to the economy and/or by actions more beneficial to the 99.9% than to the .1%.
Save this reference as your primer to current economics. Sadly, much of the material is not being taught in American schools, which is all the more reason for you to use it.

https://mythfighter.com/2018/02/14/we-all-are-doomed-again-what-will-it-take-for-us-to-understand/

 

[NorthCarolinaLiberty]

Econ4every1's solution is freebies for every 1!

 

[Madison320]

There is a problem with this assumption. Future spending=future income. Whatever the debt ends up being will add to future income. Future income will lead to future spending. The only question is, will the real labor and resources exist to meet whatever level of demand that future consumers place on the economy.

If that was true every county on the planet would be rich. Just let govt spend as much as possible.

The CBO is wrong.

I agree. The CBO is always orders of magnitude wrong on the low side.

10 years ago govt debt held by the public was 5.1T and GDP was 14.6T(actually higher using the new formula). For 2017 debt was 15.4T and GDP was 19.7T. If debt and GDP keep growing at the same rate in 10 years it'll be: Debt 46.5T and GDP 26.6T for a ratio of 175%. If my math is correct.

 

[Madison320]

Econ4every1's solution is freebies for every 1!

Looks like roads are about the only thing I have in common with that guy.

 

[Madison320]

Those darned tax and spend liberals ringing up debt right and left! Wait- this was the cut taxes and spend Republicans bringing back the $trillion deficits.

Although according to you debt is not a problem.

 

[econ4every1]

If that was true every county on the planet would be rich. Just let govt spend as much as possible.

That's simply false because all nations of the world are constrained by labor and real resources. This is the mistake that Austrians make when evaluating fiat money systems.

If I asked you if you can jump off a 10 story building...How would you answer?

Of course, you can independent of the consequences. But if the consequences matter then the answer is no (assuming you're not using any technology).

So can government's spend infinitely? Sure, just like you can jump off a building. But if the consequences matter they create a real constraint.

10 years ago govt debt held by the public was 5.1T and GDP was 14.6T(actually higher using the new formula). For 2017 debt was 15.4T and GDP was 19.7T. If debt and GDP keep growing at the same rate in 10 years it'll be: Debt 46.5T and GDP 26.6T for a ratio of 175%. If my math is correct.

Few thoughts, every dollar the government debt increased the private sector debt decreased.

The private sector was allowed to create too much debt (risk) in the run-up to the GFC. When the economy was on the verge of failure, private sector debt was passed onto the government.

Spending=income.

Reduction in debt on the private side=increase in debt on the government side.

Increase in spending on the government side=Increase in savings on the private side.

It's just simple (ok, maybe not that simple) accounting.



What went wrong? The belief that markets are self-regulating. They aren't and the GFC is evidence of that fact.

As far as the level of debt, tell me, how has an increase in debt from $5.1T to $14.6T changed your life? Do you pay more taxes? is everything three times more expensive?Do you receive fewer benefits? What has changed?

 

[Danke]

That's simply false because all nations of the world are constrained by labor and real resources. This is the mistake that Austrians make when evaluating fiat money systems.

If I asked you if you can jump off a 10 story building...How would you answer?

Of course, you can independent of the consequences. But if the consequences matter then the answer is no (assuming you're not using any technology).

So can government's spend infinitely? Sure, just like you can jump off a building. But if the consequences matter they create a real constraint.



Few thoughts, every dollar the government debt increased the private sector debt decreased.

The private sector was allowed to create too much debt (risk) in the run-up to the GFC. When the economy was on the verge of failure, private sector debt was passed onto the government.

Spending=income.

Reduction in debt on the private side=increase in debt on the government side.

Increase in spending on the government side=Increase in savings on the private side.

It's just simple (ok, maybe not that simple) accounting.



What went wrong? The belief that markets are self-regulating. They aren't and the GFC is evidence of that fact.

As far as the level of debt, tell me, how has an increase in debt from $5.1T to $14.6T changed your life? Do you pay more taxes? is everything three times more expensive?Do you receive fewer benefits? What has changed?

See we are an empire exporting our debt/inflation. It may not be as apparent to many of us. but the rest of the world can see it. Some are definitely benefiting, but many are not. Starvation on a planet of plenty. Women in China chaining there children to posts while they work in hideous conditions to make junk for us, etc. Do you think we could sustain this system without a large and sophisticated military punishing any country trying to break away from it? Just look at Libya as an example. Trying to establish a currency outside of the Fed. for an African currency. Then there was Iraq and now Iran...


We are so productive, but the middle class is shrinking, That productivity should not lead to people working many jobs just to stay a float, whereas, in the past, just one household income earner could support a family.

 

[Origanalist]

See we are an empire exporting our debt/inflation. It may not be as apparent to many of us. but the rest of the world can see it. Some are definitely benefiting, but many are not. Starvation on a planet of plenty. Women in China chaining there children to posts while they work in hideous conditions to make junk for us, etc. Do you think we could sustain this system without a large and sophisticated military punishing any country trying to break away from it? Just look at Libya as an example. Trying to establish a currency outside of the Fed. for an African currency. Then there was Iraq and now Iran...


We are so productive, but the middle class is shrinking, That productivity should not lead to people working many jobs just to stay a float, whereas, in the past, just one household income earner could support a family.

My old lady needs a better job.

 

[Danke]

My old lady needs a better job.

What does she look like, I might have an opening.

 

[econ4every1]

See we are an empire exporting our debt/inflation. It may not be as apparent to many of us. but the rest of the world can see it. Some are definitely benefiting, but many are not. Starvation on a planet of plenty. Women in China chaining there children to posts while they work in hideous conditions to make junk for us, etc. Do you think we could sustain this system without a large and sophisticated military punishing any country trying to break away from it? Just look at Libya as an example. Trying to establish a currency outside of the Fed. for an African currency. Then there was Iraq and now Iran...


We are so productive, but the middle class is shrinking, That productivity should not lead to people working many jobs just to stay a float, whereas, in the past, just one household income earner could support a family.

Do you have any idea the cycle of spending that occurs between the US and China? China buys US dollars with money it creates out of thin air to devalue its own dollar and impoverish its own people in order to advance into the age of technology. I agree the costs are born out in human suffering and environmental damage. There are trade-offs, but let's be clear, these conditions are imposed on the Chinese people by their leaders, not by the US government. US consumers are complicit, but not responsible.

So tell me...Do you know where the Chinese government gets 's most of the money it uses to buy US Treasuries?

 

[Danke]

Do you have any idea the cycle of spending that occurs between the US and China? China buys US dollars with money it creates out of thin air to devalue its own dollar and impoverish its own people in order to advance into the age of technology. I agree the costs are born out in human suffering and environmental damage. There are trade-offs, but let's be clear, these conditions are imposed on the Chinese people by their leaders, not by the US government. US consumers are complicit, but not responsible.

So tell me...Do you know where the Chinese government gets 's most of the money it uses to buy US Treasuries?

Oh well, in that case it makes it right, just like the Opium wars. NVM, the Clintons sold a lot of our tech to them for personal gain and we have looked the other way as they stole intellectual property. For what, to prop up the dollar?

As long as others are suffering by our policies, it is ok, if my stock portfolio beats inflation.

 

[Origanalist]

What does she look like, I might have an opening.

You have a opening? She'll get right on that.

 

[econ4every1]

Oh well, in that case it makes it right, just like the Opium wars. NVM, the Clintons sold a lot of our tech to them for personal gain and we have looked the other way as they stole intellectual property. For what, to prop up the dollar?

As long as others are suffering by our policies, it is ok, if my stock portfolio beats inflation.

Who said it was "right"?

I notice you avoided answering the question I asked, so I'll ask again and assume that if you don't answer that you don't know.

Where does China get most of the dollars it buys US Treasuries with?

 

[Danke]

Who said it was "right"?

I notice you avoided answering the question I asked, so I'll ask again and assume that if you don't answer that you don't know.

Where does China get most of the dollars it buys US Treasuries with?

I think I answered that, and it ain't good. Yes we are currently benefiting from those conditions in China. But it hurts a lot of people in the process. And we will/are experience that folly here some day. But currently our corporations are dumping waste in China that our States won't allow, and have terrible work conditions from displaced villagers that use to farm on their own land. I know, the argument is someday they will be better off. Well, that is not currently the case. I have live over there 3 years in Asia, and travel there regularly.

Many new rich, but...look into Tiananmen Square. 1000's murdered, for what?

 

[econ4every1]

I think I answered that, and it ain't good.

Would you be kind enough to point me to your answer, I think I missed it.

Yes we are currently benefiting from those conditions in China. But it hurts a lot of people in the process.

Totally agree. China's rapid growth is being paid for mostly in human suffering and environmental damage.

Though, and I don't know the answer to the question I'm about to ask, but do you think they would have endured any less suffering had they not tried to modernize?

It sounds like what you are saying is that it's better to experience suffering and be free than be forced and be happy (not to suggest that everyone in China is happy).

Now I understand it's even better to be free AND happy, but I'm curious if you think freedom, by itself, is happiness

And we will/are experience that folly here some day.

I suspect we'll disagree on how and why, but even Rome eventually fell.

But currently our corporations are dumping waste in China that our States won't allow, and have terrible work conditions from displaced villagers that use to farm on their own land. I know, the argument is someday they will be better off. Well, that is not currently the case. I have live over there 3 years in Asia, and travel there regularly.

Yes, it's shameful but what if there is no utopia where suffering doesn't exist. What if the only choice is suffering or greater suffering?

It seems to me that there are people here that think that individualism and sound money will result in less suffering or that they really don't care how much suffering there is, as long as people that are suffering aren't suffering directly as a result of the actions of others.

Many new rich, but...look into Tiananmen Square. 1000's murdered, for what?

So what is the answer?

 

[oyarde]

If I was a mod I would lock this thread .

 

[econ4every1]

If I was a mod I would lock this thread .

Why?