US on track to borrow most money since 2008 financial crisis

Discussion in 'Politics and the Topics of the day' started by QueEx, Jul 31, 2018.

  1. QueEx

    QueEx Well-Known Member Super Moderator

    US on track to borrow most money since the 2008 financial crisis



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    © Provided by The Hill


    The Treasury Department predicted in a report Monday that the government's borrowing needs for the second half of 2018 will be $769 billion - the highest its borrowed since 2008 during the financial crisis.

    Bloomberg reports that Treasury foresees issuing $329 billion in net marketable debt between July and the end of September, and another $440 billion between October and the end of the year. The total $769 billion comes in at the highest borrowing estimate since $1.1 trillion between July and December of 2008 in the middle of the financial crisis.

    The net marketable debt the Treasury expects to issue from July through September is also the fourth-largest total for that quarter and far higher than was estimated earlier this year.

    Treasury estimated in April that the annual deficit would boom this year, rising to $833 billion from roughly $665 billion in 2017. The cumulative deficit for the fiscal year is already $41 billion higher than at the same point last year, according to the report.

    The Trump administration argues that the strong economy will soon boost government revenue and reduce the deficit.

    The Treasury Department's report comes after the Commerce Department reported on Friday that the U.S. economy expanded at a 4.1 percent rate in the April-to-June quarter, the highest level since growth hit 5.2 percent in the third quarter of 2014 [during the Obama Administration].

    President Trump has frequently touted the economy, saying at the White House on Friday that the country is growing "at the amazing rate" and that "we're on track to hit the highest annual average growth rate in over 13 years."


    https://www.msn.com/en-us/news/poli...cial-crisis-report/ar-BBLjgQC?ocid=spartanntp


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  2. QueEx

    QueEx Well-Known Member Super Moderator

    Despite Strong Economy, Federal Deficit Soars


    August 3, 20185:00 AM ET
    Heard on Morning Edition
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    On a muggy morning this week, a group of bankers and investment managers met at the Hay Adams Hotel in Washington, D.C. They got an update from the Treasury Department about government cash flows and, according to minutes of the meeting, the picture wasn't pretty.

    Corporate tax receipts are down for the year, while government spending is up. Even with a fast-growing economy, the Treasury Department expects to borrow more than $750 billion to pay its bills during the last six months of this year.

    "The federal budget deficit is ballooning, skyrocketing, soaring, whichever way you want to describe it," said longtime fiscal watchdog Stan Collender, who blogs about federal finances as "The Budget Guy."

    "You've got a kind of perfect storm here," Collender said. "You've got more spending. You've got less revenue. And the deficit is just getting bigger and bigger, to the point where it will be at least a trillion dollars every year during the Trump administration and beyond."

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    Even the White House's own rosy forecastacknowledges that the deficit will exceed 5 percent of the overall economy next year — a level it's previously reached only after deep recessions, when unemployment topped 10 percent. Today, the economy is near full employment. But the government is still acting like a spendthrift family, piling up credit card bills even though times are good.

    "It's close to unprecedented," Collender said. "When the economy is doing well, which it's obviously doing and has done for a decade, you would want a fiscal policy that would get the deficit to go down, not up."

    But policymakers in Washington have gone in precisely the opposite direction. Earlier this year, Congress boosted spending on both the military and domestic programs. And then there's the tax cut, which the president bragged about at a campaign rally this week.

    "We passed the biggest tax cuts and reform in American history. Biggest cuts in history," Trump told supporters in Tampa.

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    In fact, these were not the biggest tax cuts ever, but they are cutting in to government revenues, despite repeated promises that the cuts would pay for themselves.

    "Let me be 100 percent clear about one thing: The tax cuts are never going to pay for themselves," said Maya MacGuineas, president of the Committee for a Responsible Federal Budget. "They can grow the economy, but not enough to come anywhere close to offsetting the cost of them."

    MacGuineas blamed an outbreak of fiscal "free-lunchism" for the growing mountain of government debt.

    "If you want to spend more, you have to pay more in taxes," she said. "And if you want to cut taxes, you have to be willing to cut spending also. And right now it seems to be this period where no politician is willing to do any of those."

    Like a family that's maxed out its credit cards, policymakers may have less room to maneuver the next time they're confronted with an actual crisis, as a result of the government's mounting debt load.

    "Last time we had a recession, our debt was half the level it is today, relative to the economy," MacGuineas said. "That meant we had a lot of fiscal tools to help respond. But as our debt gets higher, our ability to respond to a recession or another kind of crisis is definitely much more difficult."

    The growing deficit also means higher borrowing costs. So far this fiscal year, growth in Social Security, Medicare and defense spending have all been eclipsed by rising interest on the debt.





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  3. Z MONSTER

    Z MONSTER Well-Known Member BGOL Investor

    I think the economy s going to take a nose dive in about a year. Who ever wins the election in 2020 is screwed. They going to get most of the blame.
     

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