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09/11/2001 WE REMEMBER

"Fear is the foundation of most governments." - John Adams

"Despite the constant negative press covfefe" - Donald Trump


It was another crazy news week, so it's understandable if you missed a small but important announcement from the Treasury Department: The federal government is on track to borrow nearly $1 trillion this fiscal year — Trump's first full year in charge of the budget.

That's almost double what the government borrowed in fiscal year 2017.

Here are the exact figures: The U.S. Treasury expects to borrow $955 billion this fiscal year, according to a documents released Wednesday. It's the highest amount of borrowing in six years, and a big jump from the $519 billion the federal government borrowed last year.

Treasury mainly attributed the increase to the “fiscal outlook.” The Congressional Budget Office was more blunt. In a report this week, the CBO said tax receipts are going to be lower because of the new tax law.

President Trump said during a Jan. 18 speech in Coraopolis, Pa., that Republicans’ tax overhaul is already benefiting the U.S. economy. (The Washington Post)
The uptick in borrowing is yet another complication in the heated debates in Congress over whether to spend more money on infrastructure, the military, disaster relief and other domestic programs. The deficit is already up significantly, even before Congress allots more money to any of these areas.

“We're addicted to debt,” says Marc Goldwein, senior policy director at Committee for a Responsible Federal Budget. He blames both parties for the situation.

What's particularly jarring is this is the first time borrowing has jumped this much (as a share of GDP) in a non-recession time since Ronald Reagan was president, says Ernie Tedeschi, a former senior adviser to the U.S. Treasury who is now head of fiscal analysis at Evercore ISI. Under Reagan, borrowing spiked because of a buildup in the military, something Trump is advocating again.

Trump didn't mention the debt — or the ongoing budget deficits — in his State of the Union address. The absence of any mention of the national debt was frustrating for Goldwein and others who warn that America has a major economic problem looming.

“It is terrible. Those deficits and the debt that keeps rising is a serious problem, not only in the long run, but right now,” Harvard economist Martin Feldstein, a former Reagan adviser, told Bloomberg.

A strong jobs report and disappointing earnings slammed Wall Street on Feb. 2. The Dow suffered its worst percentage drop since June 2016. (Reuters)
The White House got a taste of just how problematic this debt situation could get this week. Investors are concerned about all the additional borrowing and the likelihood of higher inflation, which is why the interest rates on U.S. government bonds hit the highest level since 2014. That, in turn, partly drove the worst weekly sell-off in the stock market in two years.

The belief in Washington and on Wall Street has long been that the U.S. government could just keep issuing debt because people around the world are eager to buy up this safe-haven asset. But there may be a limit to how much the market wants, especially if inflation starts rising and investors prefer to ditch bonds for higher-returning stocks.

“Some of my Wall Street clients are starting to talk recession in 2019 because of these issues. Fiscal policy is just out of control,” says Peter Davis, a former tax economist in Congress who now runs Davis Capital Investment Ideas.

The Federal Reserve was also buying a lot of U.S. Treasury debt since the crisis, helping to beef up demand. But the Fed recently decided to stop doing that now that the economy has improved. It's another wrinkle as Treasury has to look for new buyers.

Tedeschi, the former Treasury adviser to the Obama administration, calls it “concerning, but not a crisis.” Still, he says it's a “big risk” to plan on borrowing so much in the coming years.

Trump's Treasury forecasts borrowing over $1 trillion in 2019 and over $1.1 trillion in 2020. Before taking office, Trump described himself as the “king of debt,” although he campaigned on reducing the national debt.

The Committee for a Responsible Federal Budget predicts the U.S. deficit will hit $1 trillion by 2019 and stay there for a while. The latest borrowing figure — $955 billion — released this week was determined from a survey of bond market participants, who tend to be even faster to react to the changing policy landscape and change their forecasts.

Both parties claim they want to be “fiscally responsible,” but Goldwein says they both pass legislation that adds to the debt. Politicians argue this is the last time they'll pass a bill that makes the deficit worse, but so far, they just keep going.

The latest example of largesse is the GOP tax bill. It's expected to add $1 trillion or more to the debt, according to nonpartisan analysis from the Joint Committee on Taxation (and yes, that's after accounting for some increased economic growth).

But even before that, Goldwein points to the 2015 extension of many tax cuts and the 2014 delays in Medicare reimbursement cuts.

“Every time you feed your addiction, you grow your addiction,” says Goldwein.

There doesn't seem to be any appetite for budgetary restraint in Washington, but the market may force Congress' hand.

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There are 22 Replies

"Concerning, but not a crisis" is probably the right take. And I think everyone sort of understood that the rushed tax plan they rammed through would require an increase in borrowing. Sort of unavoidable.

Where it becomes a story is ultimately the apparent contradictory nature of the GOP's rhetoric. For years, the Republican party has been crying foul about the national debt (a rallying cry that dates all the way back to the Washington administration). For years, they have been the party constantly pushing the ideology of "fiscal responsibility."

And so to turn around and pass a tax plan that would inherently require an increase of the national debt and deficit comes off, rightfully, as hypocritical. They can't blame Democrats for this one, given it was the GOP's tax plan under a GOP dominated House and Senate and a GOP Senate. They can blame Democrats for contributing to the ballooning debt over the years, but any increases at this point are exclusively on them. I don't think many would have argued that the tax plan they proposed was the definition of "fiscally responsible," but they wound up getting around it by simply declaring basically that the fiscal responsibility will come later. (In essence, it appears the plan was to decrease the revenue so much so that they could argue keeping any social programs would be "irresponsible," but that's always going to be a bit of a battle given that people - even Republicans - actually like many of the entitlement programs. (Politically, it's a bit of a gamble to assume you can force cuts later by ramming revenue reductions in a dominantly Republican Congress with a Republican President and bank on being able to sell the loss of entitlements as a problem committed by the opposition party.)

But this kind of relates to a thing I've been saying for a while: that the primary difference between Democrats and Republicans is that Democrats are at least upfront that they want government to have powers and authorities, and they believe in spending. Republicans say the opposite, but more often than not, wind up doing and believing the same exact thing.

Posted February 4th by Jet Presto
Jet Presto

Conservatives are shallow short term thinkers.

Posted February 4th by Psygnosis
Psygnosis

Not to be confused with the long term thinkers that gave us the Affordable Care Act. That individual mandate, am I right?

Trump didn't mention the debt — or the ongoing budget deficits — in his State of the Union address. The absence of any mention of the national debt was frustrating for Goldwein and others who warn that America has a major economic problem looming.

Has Trump ever given a single word in favor of fiscal responsibility? That I suppose is one advantage he has over Congressional Republicans, in the sense that the pretense was never even there.



Posted February 4th by Famov
Famov

That seems a little disingenuous of an argument given he ran as a Republican, the party that has turned "fiscal responsibility" into a mantra over the years, and has been the party consistently enabling the President to do whatever he wants as much as he wants to during his tenure thus far. The *entire* argument that he would be a somewhat solid President was that he had experience running a business, which can only truly be viewed as being sufficient experience to run a nation under the perspective of the numbers game. "He is a businessman" doesn't work as a qualification for office if the financial part of the job isn't a primary focus. In short, Trump never had to say anything about fiscal responsibility to receive the defense that he would be. That comes with the territory of A) running as a Republican, B) getting the support of the entire Republican apparatus, and C) running as a business person.

Additionally, this falls on the entire Republican party who has very much been very vocal about "fiscal responsibility." The President deserves blame for signing bills and whatever orders he has that inevitably end up requiring more borrowing. But this is largely due to their rushed, problematic tax plan, which was not passed by the President, but the entire Republican party in both chambers of the legislative. He signed it, and deserves accountability for that, but we are in this position of requiring more debt and increasing the deficit because of the GOP-dominated Congress. And almost every single one of those has explicitly used their platforms to cry about "fiscal responsibility."

So yes, the pretense has always been there and will inherently only be there. You and I might know that Donald Trump doesn't actually care about anything else, or understand how anything works (I mean, the guy *just* finished trying to convince the country 45.6 is greater than 48), but he ran and won on the GOP ballot, and he's been enabled by the entire GOP apparatus, and perhaps the biggest factor for the increased debt comes from House and Senate Republicans. It feels a little misguided to argue that there was never any pretense that this individual would be concerned about fiscal responsibility. (And also, on a basic level, it's just not true. He might not have said the words "fiscal responsibility" himself, but he *definitely* made it a point during the debates to keep railing against government spending and implied that he would bring better accountability on that front.)

Posted February 4th by Jet Presto
Jet Presto

You guys realize Republicans don't represent you, right? They only represent the wealthy and powerful. That's why the rich got the biggest tax break in the tax cut, that's why they'll find any excuse to cut government funding and replace it with privatization, that's why they make promises and lies and build entire factions under false premises. That's also why we end up borrowing more money under Republican presidents than Democratic ones: our leaders don't know how to run a good society. Even the Democrats have to respond to their donors more than their constituents, and the American people always lose in the end.

Posted February 4th by mariomguy
mariomguy

Not to be confused with the long term thinkers that gave us the Affordable Care Act. That individual mandate, am I right?

Oh, the one the right gutted and removed the single payer option and anything else that would make it affordable?

Posted February 4th by Psygnosis
Psygnosis

The ACA was far from a perfect system, but here was the intention:

1 - Private healthcare companies stay in business.
2 - People who have healthcare from their jobs remain unaffected.
3 - People who make over 133% the poverty level can contribute to a plan, therefore may get one from a state selection with lower pricing and government subsidies, making care more affordable.
4 - People who can't afford (below 133% the poverty line) get Medicaid through the Medicaid expansion. 90% would be covered by the federal, state only has to contribute 10% to expanded Medicaid.

And here's what Republicans, and insurance companies did:

1 - Hack down state clinics to make sure people who can't afford healthcare can't get healthcare anywhere.
2 - Premiums increased while quality suffered. The bulk of the burden placed on the government but also businesses and individuals purchasing plans as well. Also, with the added pressure, a lot of businesses stopped hiring full time employees.
3 - Some states implemented laws preventing state commissioners from doing their jobs to negotiate prices, keeping plan pricing high and quality of services low in a desperate attempt to shut down ACA's operation.
4 - Deny the Medicaid expansion to people who can't afford to pay for healthcare, placing them in the Medicaid gap (not enough money to qualify for ACA care, too much to qualify for Medicaid).

Republicans have absolutely NO healthcare plan. None at all. If you don't have thousands every month to afford private care, you shouldn't be alive. At a Tea Party debate the moderator asked Republicans "If someone gets taken to the emergency room and has no insurance, should they just die?" And none of them had an answer.

So we have the most expensive, least efficient healthcare system in the world and some Republicans continue to have the gall to point fingers at single payer healthcare in a negative light. 62% of all bankruptcies in this country are due to medical bills, and we're the only country in the world that relies on a private healthcare system.

This. Is. STUPID.

Posted February 4th by mariomguy
mariomguy

Oh, the one the right gutted and removed the single payer option and anything else that would make it affordable?

And for your next trick you'll offer up another non sequitur in order to distract from the obvious reality that Democrats used their fleeting majority to pass this "gutted" law.

That seems a little disingenuous of an argument given he ran as a Republican

Donald Trump's platform had nothing to say about deficits or debt, and instead he ran on the promise of spending trillions. It looks as though he will actually keep the promise, and the "Republican apparatus", such as it is, was usurped by Donald Trump for his own political ends. There is no end to Republican hypocrisy on the subject of fiscal responsibility, but as far as I can tell none of it belongs to Trump.

Posted February 4th by Famov
Famov

Gutting Social Security is probably next on the GOP's agenda to make up for lost tax revenue.

Edited February 4th by Psygnosis
Psygnosis

Famov, Canadian Republican representatives tried to speak with United States Republicans over here about the efficiency of single payer healthcare. They were laughed at. We have the least efficient healthcare in the world, more than 20% of our GDP being ripped to it, and Republicans think they have ground to stand on declaring private healthcare is working, or a good idea.

Face it, your representatives do not represent YOU. Insulin is a drug that costs $1 to produce and has become a $37,000,000,000 industry, projected to become a $39,000,000,000 industry in a couple years. Don't you think if we had a free market the free market would've found a way to get insulin for cheaper than $250 a vial? We are not free living under this system. We still wouldn't be free under the Democratic system, but even that BS would've been an improvement.

On the subject of healthcare Democrats are abysmal and Republicans do not register at all. But almost all of our nation is controlled by Republicans. If there's anything I'm thankful for with Trump, it's the fact that he's proving how full of crap Republicans are. $1,000,000,000,000 we're borrowing this year for his freaking tax break. Nice job breaking it. Now do you admit there is a flaw in the system?

Posted February 4th by mariomguy
mariomguy

Famov, Canadian Republican representatives tried to speak with United States Republicans over here about the efficiency of single payer healthcare. They were laughed at.

Are you sure it wasn't just because they were Canadians?

Anyway Canada doesn't have a Republican party. They have a Conservative Party, and while I don't speak with any kind of authority on this I'd have to assume that they share more philosophically with the British Conservatives than they do with the GOP.

But almost all of our nation is controlled by Republicans.

God bless Barrack Obama. He may well have put more Republicans in office than anyone else in the history of this great nation.

Posted February 5th by Famov
Famov

God bless Barrack Obama. He may well have put more Republicans in office than anyone else in the history of this great nation.

I would say gerrymandering and pseudo-libertarian propaganda played a bigger role. If Obama was in any way responsible for Democrats losing elections, it’s that he was black (white southern voters hated this) and not populist-left enough (sane people hated this).

Posted February 5th by pacman
pacman
 

It wasn't about hatred of Obama per se, though I am happy to agree that sane people hate Barrack Obama. His approval rating and ability to hold together a broad coalition through two elections is evidence enough that the man himself was able to work his pseudo intellectual, celebrity charm into some kind of widespread likeability with most people outside of the Republican base.

But he left destruction in his wake, if destruction is to be understood as Democrats losing every elected office outside of the presidency. The rollout of the Affordable Care Act is frequently cited as among the biggest reasons why Democrats were beat so badly in 2014, and 2016 demonstrated what a catastrophe it was for Democrats to assume that they could prevent the evaporation of the Obama coalition by leading middle America onto the wrong side of the culture war.

Gerrymandering is an unproven and likely unprovable scapegoat. We will learn the truth of this once Donald Trump becomes the best thing that ever happened to the Democrats in 2018.

Posted February 5th by Famov
Famov

Frankly Trump holds more appeal to everyday Americans than the average corporate Democrat or Republican. If Dems don’t come out swinging hard from the economic left (see: Bernie), or if they choose to eembrace SJW crap over substance, they will get floored by the GOP, unless we have a complete economic meltdown under Trump or something.

Posted February 5th by pacman
pacman
 

This is a really great example of Famov, and be extension the vast majority of unprincipled conservatives today. Trump and the GOP put us 1 trillion in the hole and what's the response? Knee-jerk attacks on democrats and Obama.

The GOP will never be a mainstream political party again after this, America left them behind years ago.

Posted February 5th by Agis
Agis
 

Gerrymandering is an unproven and likely unprovable scapegoat.

Republicans closed down DMVs in poor neighborhoods and required people present a photo ID to vote. This lead to a lot of poor people who lived in rural counties without access to a place to get a driver's license or vote. And those centers started reopening again after elections were over.

Famov, if Trump spends another couple years in office, he would have borrowed more money than any other President in history and every day we have a ban against importing pharmaceutical drugs from Canada is another day Republicans use excessive regulations against us. Call yourself a Republican and I will cry. Name one law that Republicans enacted to benefit the people. Until then, don't look this way for respect. Republicans in my state did their darnedest to make sure I won't ever have healthcare to live. I don't want to hear positive things about them unless you can verify they're absolutely true. I've had it with their lies.

Posted February 5th by mariomguy
mariomguy

Explain to me why the supreme court is shutting gerrymandering down if it's unproven?

Posted February 5th by S.o.h
S.o.h
 

I live in a state that was Gerrymandered, Famov. Nobody likes Rick Scott, but he's still sitting in our freaking Capital. Don't sit there and pretend this BS doesn't happen to anybody, because it does.

Posted February 5th by mariomguy
mariomguy

I suggest moving discussion about gerrymandering to the new thread I made.

Let's stick to discussion about debt and how, despite alleged GOP commitment to debt reduction and Trump's campaign assertion that he would *reduce* the debt, it's skyrocketing wholly irresponsibly.

Posted February 6th by Agis
Agis
 

This is a really great example of Famov, and be extension the vast majority of unprincipled conservatives today. Trump and the GOP put us 1 trillion in the hole and what's the response? Knee-jerk attacks on democrats and Obama.

Ouch, getting called a partisan stooge by you is like being called a partisan stooge by someone who invokes Noam Chomsky in their post election shilling for Hillary Clinton.

"In the end, people like Pacman listened to the Trump narrative and felt so morally superior to vote for the lesser of two evils -- which, as Noam Chomsky says, we must always do. I wish they had listened to Bernie himself and voted for Clinton."

http://gtx0.com/view.php?post=106031
Oh wait.

The original version of my sick comeback was going to be "getting called a partisan stooge by you is like getting lectured about sexual misconduct by Bill Clinton." but I thought that was too easy, and ultimately I think there's a more constructive way to approach this. For instance, I assume everyone here can read and as such it becomes quickly evident from reading this thread that I only brought up the Democrats in response to Psygnosis'... political commentary, we'll call it. And yet right below that very retort I admit that the Republicans were hypocrites. Such introspection with regards to my own "side" would indeed be refreshing were it to ever come from you, but instead I must contend with your likewise typical behavior of making the least charitable (and obviously incorrect) assumptions about my motivations in lieu of having an argument.

Edited February 6th by Famov
Famov

famov, are you okay? you've been extra snippy lately

Posted February 6th by poptart!
poptart!
 

^ It's happening to all Republicans who got duped. They're just now getting around to realizing it. I'm still waiting to hear what the hell law Republicans passed in the last few years that actually helped Americans. I'm not gonna get an answer from him, am I?

Posted February 6th by mariomguy
mariomguy
Reply to: The U.S. government is set to borrow nearly $1 trillion this year, an 84 percent jump from last year

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