I am admittedly a budget hawk when it comes to our burgeoning debt and runaway spending. However, I remain astonished that there was not more of an uproar over the massive budget just passed after lifting debt ceilings by both parties. Now, the Congressional Budget Office is projecting that the combination of the new tax bill and our massive budget will push the national debt to nearly the same size as gross domestic product by 2028. That is with an economic growth rate of 3.3 percent this year.
The cumulative deficit over the next decade is projected be $1.6 trillion larger than previously projected so that, by 2028, the national debt will total 96 percent of GDP.
As in the past, members who voted to lift debt ceilings and blow up the budget are now pledging to curtail future spending and even pass a balanced budget amendment to the Constitution. We should not need such an amendment if we simply voted members out of office for saddling our children with crippling debt. We are heading down the same path as Greece where we cannot afford to run the government due to debt payments. The reason is a lack of accountability for budgets bursting with pork barrel projects, a refusal to deal with entitlements, and continued waste in our government.
The trajectory toward 2028 is an utter disgrace and it will be our children who will have to foot the bill for our lack of responsibility.
Here Professor Turley makes no mention of the massive tax cuts Republicans passed last fall. Those tax cuts, passed when unemployment is at historic lows, will certainly add to budget deficits. Furthermore the economy is not likely to get much bang from said cuts. Those cuts would have been much better ‘spent’ during the next recession.
And to think that only 2 days ago Professor Turley grimly noted that most Americans pay no taxes (because they don’t make enough).
The tax cuts are kicking in. A year ago CBO anticipated a 2% growth rate in 2018 and now revised that to 3.3% and increased its projection for 2019 from 1.5% to 2.4%. These feed into their GDP forecast which is increased in 2027 by $6.1 trillion. This growth is anticipated to produce $1.1 trillion in new revenue which pays for 2/3 of the tax cut. On top of that CBO expects hundreds of billions in savings associated with other factors that accompany increased growth rate, including lower unemployment insurance, food stamps, welfare, etc. That probably does not take care of the entire tax cut but with a little bit of fiscal restraint (I know that is a big order) it could be completely covered.
You really annoy Peter Hill when you recite facts that blow holes in his preferred narrative.
Debt and funding for the welfare state must be eliminated.
Congress has merely the power to tax for “General welfare”, omitting and, thereby, excluding any and all power to tax for “individual welfare.”
General = All
Welfare = Get Along Well
Water, roads, electricity, sewer, currency, post office – that which ALL use in like amounts.
Charity is industry conducted in the free markets of the private sector. The nationalized charity industry must be returned to the private sector.
Article 1, Section 8, Clause 1
“The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;…”
The entire welfare state, from cash payments, food stamps, utility subsidies, WIC, HAMP, HARP, HUD and HHS through Medicare and Medicaid up to and including Obamacare, is unconstitutional and must be eliminated and have all funding withheld (Social Security is unconstitutional and incoherent confiscation and reconveyance of private property).
The American Founders provided citizens with the one and only materiel privilege: Freedom. Freedom, free enterprise and freedom from governmental mandate and dictatorship.
“If they would rather die,” said George, “they had better do it, and decrease the surplus population.”
The Republicans ought to run on killing Social Security and Medicare, great idea!
Karl Denniger just had an article related to this:
Squeeky Fromm
Girl Reporter
This kind of debt is a one-way street. Anyone who thinks the nation can thrive under this trend is mistaking hope for wisdom.
One of the inherent problems is that to pass a budget, you have to get enough people in Congress to agree. And to buy their agreement, you have to give them stuff. They get their pet projects through, their pork spending. They hold the budget hostage until they get their pound of our taxpayer flesh.
That is not serving our country. That is not serving the taxpayers. That is how you play the game to get votes, and live a very comfortable lifestyle in government.
We get what we vote for.
Do you know what our country needs? A meritocracy in Congress. One of the rubrics should be reducing the debt, living within our means and other identifiable factors indicating a Congressman doing a good job. Admittedly, I would be at a bit of a loss at first coming up with a grading rubric, as what example do we have to strive for of a Congressperson doing a good job? But I think with a little effort, we could come up with something. And then each Congressperson should get graded. A failing grade means they will not be invited back next term by the voters.
Does that meand GDP minus Debt Service equals NDP?
I guess that’s a good deal if you are one of the lenders. It would mean the national budget and economy is a cash cow and all you need to milk it is enough to buy into Treasury Bills which of course have one huge advantage over banks and a few smaller ones over other forms of investment.
Unlike banks they pay out at face value not a max of $250,000… and never go bankrupt (it’s now called a great recession) .
Second, there is only one down side and that is devaluation of the dollar and it’s buying power
Third, Maximum security whereas most investments require ‘risk’ capital.
Even at zero percent interest it’s less risky than any other form of investment. The 30% devaluation during the last administration still left people with 70% of their former worth in terms of buying power where as a bank failure would leave you with the FDIC maximum.
So what maintains or increases in value? Property probably as long as the tax everything at all costs crowd doesn’t get back in power….
I always laugh at the GDP figures as they never include debt service instead substituting this “Since we owe it to ourselves it isn’t a debt it’s a gain?”
Try that anywhere but the government and see how fast the cell door slams.
And the beat goes on……….Republicans will be the first ones screaming about debt as soon as a democrat gets elected President. Newt laid it out years ago, drive up the debt so they can get rid of SSI, Medicare, etc etc etc.
It is a matter of record that Speaker Gingrich was a key author of the 1997 Balanced Budget Agreement, which was signed by President Clinton.
It’s also a matter of record that we had near-balanced budgets in the mid-to-late 1990s, when Gingrich was Speaker of the House.
Family values Newt Gingrich?
Another thumbs up, Holmes.
Jim22
Why do you feel it’s right to waste billions each year on between seven and eight hundred military bases around the world?
Why do you feel it necessary to lie about the number of military installations?
The ratio of military expenditure to national product is 0.04. It’s hardly been lower at any time since 1939. Since 1973, between 70% and 87% of American manpower has been billeted in the continental United States and most of the remainder in a list of about 7 countries. The Southern Command has about 2,000 billets. There might be 5,000 in tropical Africa, &c.
bill, I don’t. I’ve never written a check or signed a p.o. in my life authorizing military bases around the world. Kidding aside, I do favor completely pulling out all bases in Europe and where there is no conflict. Let European countries pay for their own protection and see how well they get along. History shows it will be fun to watch.
Jim22
Good to know that you at least favor closing bases in Europe. That’s a start, but as you can see in other comments here, the MIC propaganda/rationale is still that this waste of money is but a small percentage of the budget.
Neutrality is prosperity.
That’s what Switzerland thought.
American billets in Europe have been declining for decades and are a fraction of what they were 50 years ago.
Pretty much all of our politicians are half Keynesians, Spend lots of money when the economy is down to stimulate the economy, spend even more money when the economy is up because, well, just because.
Not really. This isn’t done for counter-cyclical macroeconomic aggregate demand management. Fiscal policy isn’t all that effective for that in most circumstances. It’s done because they’re too incompetent to match expenditures and revenues and driven by what donors want, by what might be said in ad campaigns, by what constituents want. Prior to 1961, politicians balanced budgets routinely, because elite culture was very different. Public decision-making wasn’t in the hands of junk like AM McConnell and Charles Schumer.
We need a new political party to be founded in this nation. No Dems, no Repubs, new folks who oppose the debt.
This latest boost by Trump is of his philosophy of all sizzle no steak. Trump bumped up the debt where he campaigned to lower it. This is not hard to understand if you understand Trump. First he lies easily. Secondly, this is how he navigated his inherited life; through spending other people’s money and simply going for broke on any crazy idea. Unfortunately for some, he failed more often than he succeeded. Six bankruptcies left banks losing, contractors losing, suppliers, losing but Trump coming away with yuge tax write-offs while skipping out on his debts. That is how he is approaching running the country.
Perhaps the time will come when those owed will get stiffed, T-bill holders will take a bath, pensions will be cut, and other sorts of austerity used to balance the books will be not only practiced but the whole mess will be blamed on the Democrats, socialists, etc. That’s what is going on, has gone on, why should it not continue?
So, here’s to all the dupes who brought us the sizzle but missed the steak.
The net increase in the nominal debt during the years running from 1955 to 2008 should have been $0, bar perhaps a small increment incurred at the beginning of the VietNam War. There was no banking crises during those years, no war of general mobilization, and no period of chronic and persistent production below capacity. They should have been running small surpluses during ordinary years and modest deficits during recessions all of which netted to zero during each business cycle. Also, there should never have been an explosion of inflation. The Federal Reserve successfully re-stabilized prices in 1951 and 1952 and they remained fairly stable for 14 years. Even without the Taylor Rule, they knew how to accomplish that, something they forgot between 1966 and 1979.
The vast majority of the debt is owed to ourselves. Are we going to foreclose on us?
Wow, that is scary.
The richest 0.1% are trying to destroy Social Security through alarmism about the debt. When looking for someone to believe, Dean Baker, Gordon Lafer and Paul Krugman are good because they assemble all of the economic information. Business tyrants like Pete Peterson who have spent in excess of one-half billion to destroy Social Security, would prefer we not know the information of Robert Reich and the content of the book, “The One Percent Solution” by Lafer.
http://www.usdebtclock.org/
No entity or individual can live beyond their means indefinitely. There will be a day of reckoning.
But governments with their own fiat currency can always inflate.
See Keynesian economics.
That observation has nothing to do with the specific contentions of ‘Keynesian economics’.
You can inflate, but there are some constraints: (1) the bulk of your debt has to be denominated in your own currency and (2) the inflation reduces the real value of debt stocks. However, it also increases the service charge on those stocks and new issues (or, at least, renders servicing charges higher than they otherwise would be).
Roger Rives,…
-I agree on ” the day of reckoning”, but it looks to me like it’s anybody’s guess as to what the reckoning will be, and when.
Japan’s Debt to GDP ratio is about 250%, v. about 100% in the U.S.
Their economy isn’t the healthiest, but they aren’t facing an economic disaster, either.
I’ve seen numerous predictions over the years about the tolerable limits of debt….that a 70% ratio would be where we’d “hit the wall”, or at 85% “it’ll all come crashing down”, etc.
Given that many of the dire predictions haven’t come true….at least, not yet….I think the issue of the debt has been put on the back burner, and there’s more widespread apathy than any real concern about the issue.
Rogof and Rhinehardt’s debunked research was an attempt to sound an alarm about debt. It failed.
The richest 0.1%’s plot to eviscerate citizens’ retirement has no economic defense. But, the pipeline of funding for the alarmist PR won’t be shelved. Predators like John Arnold, SIEPR’s funders, Pew and the Kochs’ State Budget Solutions, created a playbook to destroy Social Security, starting with pensions. Excessive greed is as certain as baseball’s spring training.
This is public debt, not foreign debt.
The ‘reckoning’ will come when a bond sale fails. That’s a ways off.
Nutchacha,…
With the debt piling on for years, and the downgrading of U.S. debt by at least one agency, it seemed likely that “the bond vigilantes” would demand higher rates.
That didn’t happen, at least in the short-to-intermediate term ( as many had predicted, for years).
I think, eventually, there will be a need for substantially higher rates to entice the purchase of Treasury debt, but I don’t anticipate that we’ll face a crisis that involves a failure to issue new debt.
Overtaken by events. The national debt already exceeds GDP, as of the end of 2017. The U.S. debt-to-GDP ratio for Q4 2017 is 104 percent. That’s the $20.493 trillion U.S. debt as of December 29, 2017, divided by the $19.739 trillion nominal GDP.
Bill H.,…
– Your numbers are more realistic….the deficit is often understated, primarily due to stripping out the Treasury’s responsibility for the debt to the Social Security trust fund.
And, there it is…the tie-in to Social Security – labor’s money, coveted by the richest 0.1%.
Exactly, the USA total debt already exceeds the GDP by any reasonable forecast. Unfortunately, as bad as it is, inflation is one of the solutions. The solution to excess debt is always more painful than the benefit that came from overspending.
Not according to some economists.
Evans speaks for Pete Peterson- $1/2 billion spent to destroy Social Security.
“Both parties?” By all means, blame both parties equally. And that estimated 3.3% GDP Growth will be a farce as well. Throw in a trade war with China and we’ll really have some fun.
But the GOP is (was) the party of “fiscal responsibility.” GOP doesn’t want to remember that since Trump arrived in their playpen.
When the Kochs boasted about their recent, unprecedented, 5-year political “success”, they admitted ownership of the anemic 2.2% average annual GDP growth.
I’ll pay heed to the economists on this. Non-experts on the subject really muck it up.
So do the economists.
Yes, Milton Friedman got it wrong. But with accumulating evidence more recent economists do better.
They might do better at reviewing the economic history/”accumulated evidence” and “predicting” what happened in the past.
I don’t see any evidence that their economic forecasts are any better.
“It is very difficult to predict, especially the future.”
AEI, voice of the donor class, promotes a single version of political economics. The U.S. should heed economists who aren’t intellectual prostitutes.
Dear Professor, were you not listening when people will screaming about the tax breaks for billionaires and corporations as well as millions if not billions of corporate welfare in terms of government contracts, direct grants and a bulging military budget. Of course the donors were quite happy as we heard from Senator Lindsay Graham.
The GOP will use this “crisis” that they’ve created to trash the social safety net while cashing in their insider profits..
I know I’ll get bashed on this thread but there it is.
Thumbs up.
Thumbs up.
The learned from the previous “rock star” that you never let a good “crisis” go to waste. Why do you feel it is right to steal more property of the “rich” to pay for our overspending?