Budget Debt
The US Government spends more than it takes in just about every year. Here are the budget deficit numbers by year since 1932. If anyone wants to know why we have a budget problem in this country, all you have to do is look at the running debt clock. We are now at $21T in debt.! But, if big numbers alone don't get your attention, then lets put the $21T in perspective, it represents over 100% of GDP. The nation owed $10.6 trillion on Jan. 20, 2009, when President Obama was sworn in, and he doubled it – more than Bush piled up in two terms. There is bipartisan agreement that we cannot sustain this level of debt. There is also bipartisan agreement that we must correct the outflows exceeding inflows that drives the debt higher every second (see debt clock) . Everyone who manages a checkbook has seen this problem before and knows how to correct it - reduce expenses and increase income. Increasing revenues is critical to the solution, but will not have an immediate impact. Reducing expenses is also critical to the solution and can generate immediate impact. It is the only thing in your control instantly! Sequestration and government shutdown revealed that with immediate impacts in 2012 & 2013. Everything else we here about this subject beyond these two facts is just noise and should be ignored. The political left and right cannot agree on how to correct this problem. The left solution to our problem is to increase taxes on the rich to increase income. Currently the top 20% of income earners pays 80% of the federal tax burden. So do we want them to pay 100%? 110%? 120%? Maybe just write the check every year for the entire cost of government, whatever it is? Clearly this is not a solution. The right wants us to reduce spending and taxes, which was also a poor solution in a recessionary economy, but in a growing economy in 2017 has promise. But, the truth is we must do both (reduce expenses and increase income), we must do it now and it will not be easy. All the political hot air outside these two facts is simply a distraction from the difficult but obvious answer. Trump's tax law in Dec 2017 had an economic stimulation effect. A growing economy will usually increase income (tax revenues for the government) over the 10 years, but not immediately. The Trump tax reform due to money overseas that will be returning home, will have immediate positive revenue impacts. His military defense spending will have a negative national debt impact. To immediately begin to impact our budget deficit and debt problem whiling anticipating increased revenues we also must immediately and dramatically cut spending. That MUST include discretionary spending AND entitlements (Social Security, Medicare & Obamacare) which represent 90% of the problem. The left will say you are hurting education, the homeless, healthcare of all Americans, the elderly and on and on. The right will shout "we are already taxed enough". All This whining MUST be ignored. No one wants to hurt themselves, their families or their neighbors We have no choice but to intelligently make these difficult decisions while minimizing the pain. But there will be pain. And our representatives MUST ACT NOW. It is a dereliction of duty if they do not. The 2 year budget passed Feb 2018 does not do this. It was a purely bi-partisan negotiation (which is good) but gives everything to everyone and makes no tough decisions on spending. Below you can watch the ongoing debate on this critical issue. And hopefully see the solution we need develop. Then, in 2020, the COVID-19 pandemic arrives and budget busting, debt and printing money takes on historic proportions!

Are We 'Coming Apart'?

8/12/21
from The Gray Area (160):
8/12/21:
Jared Dillian thinks so. In his daily 10th Man email, Mr. Dillian says this: Last week, the Centers for Disease Control and Prevention announced that it’s extending the eviction moratorium. No more rent! How many branches of government are we up to now? Then, the Department of Education announced that it is extending student loan forbearance for the fourth time. The new extension will last until January 31, 2022. But this will be the last one, they’ve assured us. No more student loan payments! No more work! No more school! Society is coming apart before our eyes. What does this all mean? We have heard echoes of this before: in the 1960s, during the counterculture movement, and in the 1920s, with the reaction to alcohol prohibition. But when other countries experience episodes of rising inflation, stuff gets weird. This was well-documented with Weimar Germany, where great social upheaval coincided with a period of hyperinflation. We’re in the process of passing a joke infrastructure bill in a bipartisan fashion, with a spending bill coming down the pike that is five times larger than that. It is possible that we could end up with a $7 trillion deficit this year, or about 30% of GDP. I haven’t looked it up, but I think this is the biggest deficit in the developed world—in history. In peacetime, of course. In January, I wrote two posts that were similar dark views of our future. The first, Forgive Them Father, For They Know Not What They Do. This was followed by This is 1931 Germany, which included a video from Tucker Carlson Tonight. Of course, YouTube has removed that video. Everywhere you look, we appear to be coming apart. From censorship, to cancel culture, to COVID cash payments, to free rent, to free school, to free child care, to higher taxes, to historic government spending, to inflation, to millions of unfilled jobs, to printing money, to exploding debt, to distrust of each other, to division by race and gender, to educational indoctrination (CRT), to teacher resignations, to foreign policy failures like Afghanistan, Iran & China, to invasion at our southern border, to street violence, to police resignations, to regular political impeachments of the opposition, to political prisoners, to an incompetent political class who doesn't care. That is just the past 7 months! We are at a breaking point. More From Maudlin Economics:


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