Posted on 07/23/2021 4:29:16 AM PDT by Kaslin
It hardly seems noteworthy anymore that Congress is proposing trillions of dollars in spending. After a parade of trillion-dollar spending bills over roughly the last year, congressional leaders are rolling out a budget that will pave the way for another $3.5 trillion in spending. The budget accounts for everything from infrastructure, to social welfare, Medicare expansion, and immigration. A package this broad would be irresponsible under any circumstance, but given the recent report by the Congressional Budget Office (CBO), it is especially problematic.
On July 9, the CBO released its monthly budget review for June. The numbers did not paint a pretty picture for the fiscal state of the nation. According to the report, “Outlays in the first nine months of fiscal year 2021 were almost $2 trillion more than spending during the same period two years earlier.” The CBO attributes most of the sharp jump to pandemic-related spending.
As a result, the CBO projects that if nothing changes about the nation’s spending habits, the budget deficit for the year will reach a staggering $3 trillion. While this number is a mere $130 billion less than last year’s deficit, it is triple the deficit in pre-pandemic in 2019. This report is not taking into account the massive spending packages that seem to be just around the corner as a result of the $3.5 trillion budget deal. Needless to say, the numbers are likely to get worse.
Though Congress may not seem to care anymore about these astronomic numbers, they are historic. The expected $3 trillion deficit represents 13.4 percent of GDP. Both numbers are the second highest of their kind since 1945 – surpassed only by the deficit and deficit-to-GDP ratio of last year. Despite these alarming numbers brought forth by the CBO, very few lawmakers are demonstrating any willingness to cut back or to change existing habits.
While the deficit may end up being slightly lower than last year – a projection thrown into doubt because of the recent budget deal – this is not because of any renewed sense of fiscal responsibility. It is because the economy was able to recover after the devastation of last year. Tax receipts rose by a whopping 35 percent from last year. Yet, our leaders still managed to accumulate another $3 trillion in debt (at least).
This is reflective of the painful mixed messaging going out on this reckless spending. As lawmakers tout the necessity of all this spending to assuage the pain of the pandemic, they simultaneously talk about the miraculous recovery the economy’s undergone. We are – for all intents and purposes – on the other side of this pandemic. It is time our elected leaders start governing like it.
Given the prevalence of massive expenditures, it may begin to seem like Congress is playing with monopoly money at this point, and act as if none of these numbers actually matter. This could not be further from the truth. They do matter very much. In fact, if current trends are not reversed, they will matter in a way that is painful for millions of Americans across the country. They may not feel it quite yet, but the debt looms ever larger and the bill will eventually come due for everyone.
The national debt has, in recent years, eclipsed 100 percent of GDP. This means, in essence, we have to borrow money to pay interest on the money we have already borrowed. This will create an ever-quickening spiral downward. As of now, the U.S. pays roughly $300 billion per year in interest on the debt. At current projections, that number will reach a full trillion by the end of the decade.
This will only end one of two ways for the country. The first is that the ever-increasing expenditures on debt financing will crowd out spending in other areas and force the nation into strict, immediate austerity measures that many are wholly unprepared to deal with. The other way is if the government decides to ignore the problem and ameliorate it by printing more money to assist with financing. At that point, the nation will experience crippling inflation that will only get worse until spending is reined in.
Elected leaders are kicking the can down the road, many probably hoping they will be long out of office by the time the consequences come down. However, it is time to lead and make cut backs now before even sharper, more painful cuts have to be made years down the line.
This CBO report should light that fire and signal to Congress that this $3.5 trillion budget deal is a recipe for failure.
It’s too late. There’s no stopping what’s coming.
L
All my life I’ve heard the Federal Budget Deficits will destroy our economic system, so far it hasn’t happened as we’ve been told, at some point the deficit will destroy our economy sending us into a depression but until that happens warning about deficits now is just about getting on notice to say I told you so when it inevitably happens
The federal government has one surefire way to thieve the wealth of old people. Spend money which they don’t own. The process devalues every dollar held by Americans while enriching politicians and their cronies.
When has the CBO’s projections ever been correct? It seems it is always much worse than CBO stated.
I know and I hate it.
This will be painful for everyone.
It is the intention of the Democrats to destroy the economy. They see it as an opportunity to take control of every facet of our lives by promising a fix. By the time the majority of Americans realize what’s going on it be too late. We won’t have the ability to take our country back; a police state is inevitable. Count on it.
The Communist Democrats are heck bent on destroying our economy. Mindless spending is part of their plan to skip socialism and go directly to communism.
All my life I’ve heard the Federal Budget Deficits will destroy our economic system, so far it hasn’t happened as we’ve been told, at some point the deficit will destroy our economy sending us into a depression but until that happens warning about deficits now is just about getting on notice to say I told you so when it inevitably happens
—
This is like the old story about the farmer who decided to save money by not feeding his horse. For many days, everything seemed fine. Then the horse died.
At least I recognize that the economy will die and being prepared for when and if that happens while I’m alive is key for me
“This will be painful for everyone.”
It will be lethal for many.
L
Democrats don’t care. They know the dollar is going to crash, so print and spend as much as you can as long as it still buys your power. There may come a time when it won’t.
The first...force the nation into strict, immediate austerity measures that many are wholly unprepared to deal with.
The other way...ignore the problem and ameliorate it by printing more money to assist with financing."
"With Democrats in control...I'm gonna have to take 'Stick their heads in the sand' for a $1000, Alex."
Next crisis is the exhaustion of the Medicare Trust Fund (HI) in 2026. By law, benefits must be reduced to the level of revenue, which means a 20% cut. Already 40% of Medicare funding comes from the General Fund and that percentage will increase as the baby boomers retire at 10,000 a day until 2030.
The debt servicing costs and entitlements are increasing far faster than revenues. Printing more and more money by the Federal Reserve will eventually lead to the destruction of the dollar as the world’s reserve currency. The math is irrefutable and the results predictable.
It will be very painful for a lot of people who have paid into Medicare for their entire lives only to have to cut back severely when they need it most....
People need to be ready as best as they can be for what is coming....
Medicare is Bad Medicine for Young America
This graph shows that the average man and woman (average defined in the study as average income over their working lives and living to the average life expectancy) who start receiving benefits in 2010 get over 3 times more in benefits than they pay in to the system! Of importance, the study accounts for inflation by calculating all past taxes and future payments in 2010 dollars to provide an accurate comparison.
I’m sure what you are saying is 100% correct but tell that to millions of retirees who think Medicare is for life and didn’t plan for any contingencies it will be ugly
There will still be Medicare, but benefits will be reduced or taxes increased or some combination thereof. Maybe they will reduce the defense budget like Europe did to keep its welfare state going. In guns vs butter, butter always wins because it has more constituents.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.