Boom, boom, boom, boom – the US deficit and debt continue to explode

In honor of John Lee Hooker’s famous lyric, which is played at the beginning of “NCIS – New Orleans” and in the movie “Blues Brothers,” a good wake-up call for our US deficit and debt is “boom, boom, boom, boom.” Please note, this is not the trade deficit, which is overblown as a problem as we are more of a consumer nation. This is due to our government spending far more than they take in revenue.

Per the following introduction in a Bloomberg News article, “U.S. Budget Gap Balloons to $739 Billion Despite Tariff Revenue,” we have an escalating problem.

“The U.S. budget deficit widened to $738.6 billion in the first eight months of the fiscal year, a $206 billion increase from a year earlier, despite a revenue boost from President Donald Trump’s tariffs on imported merchandise.

The shortfall was 38.8% more than the same period a year ago, the Treasury Department said in its monthly budget review released on Wednesday. So far in the fiscal year that began Oct. 1, a revenue increase of 2.3% hasn’t kept pace with a 9.3% rise in spending.”

Right now, our US debt tallies more than $22 trillion and was expected to increase by $10 trillion over the next ten years, before the tax cuts in December, 2017. Our fiscal year runs October through September, so this is the first fiscal year with full benefit of the tax cuts. The Congressional Budget Office forewarned the tax cuts would increase the debt by $1.5 trillion over the next ten years over the already projected $10 trillion. That will put us closer to $34 trillion at that time.

Yet, Americans were told by the president and favorable politicians that the CBO was wrong and growth would accelerate enough to pay for the debt using the assertion “the tax cuts will pay for themselves.” Per the Committee for a Responsible Federal Budget, tax cuts do not pay for themselves, with the best historical result being in the neighborhood of 30%, but usually much less. That leaves 70% of the revenue reduction adding to the deficit in the best of times.

The reasons for the increase in deficit are increases in military, healthcare and interest cost spending, which have overshadowed the revenue increases due to the longest running economic growth period in the US. Even the worst budgeter amongst us knows, we should be paying down debt when times are good, not increasing it. Sadly, the economy has begun to slow some, so the tax cutter’s rosy projections of 4% and above growth have not materialized (except in an isloated quarter) and economists are expected  lower growth rates than the current 3% per annum the rest of the year.

Per The Concord Coalition, the above Committee for a Responsible Federal Budget and the Simpson-Bowles Deficit Reduction plan from December, 2010, we must solve our deficit and debt problem through spending cuts and revenue increases (tax increases) both. The math will not otherwise work. If any politician, no matter how smugly, tells you otherwise, they are not be honest with you or are misinformed themselves.

To be brutally frank, I said so then, but the tax cuts passed in December, 2017 were malfeasance in my mind. We borrowed from our future to make a pretty good economy a little better. It was also hypocritical. Former Freedom Caucus members got elected saying the previous $5 trillion, then $8 trillion, then $13 trillion debts were abhorrent. Now, when it is just below $22 trillion, they pass a bill that increases it even more.

When I raised this with a Freedom Caucus staff member, he curtly told me the CBO is often wrong and they are wrong on this. My push back was simple. These folks do their homework to try and get it right. And, what I have found in my 40 years of adult life, is politicians hail the CBO when their number agree with their decision and call them on the carpet, when they don’t. Yes, it is a projection, but these folks try to be apolitical.

Folks, we have a problem that is not getting talked about enough. We must cut spending and raise revenue. My GOP friends have ceded their fiscal stewardship mantra – that is highly unfortunate. My Democrat friends need to question every candidate on how they plan to pay for their ideas and what they plan to do about the debt. We cannot have Medicare for all if we cannot pay for it.

So, let’s get real and ask politicians some pointed questions. If we don’t, John Lee Hooker will sing even more loudly. “Boom, boom, boom, boom.”

 

5 thoughts on “Boom, boom, boom, boom – the US deficit and debt continue to explode

  1. Good article, Keith. Apart from the obvious waste in government spending allocation which is hemorrhaging everywhere, two things come to mind: making the super rich carry their fair share (burden) of taxes instead of their current free ride and of course, reducing the military budget to less than a quarter of its current level – and no one would notice except the wasteful and murderous fat cats at the top of the receiving escalator. But they’re going the other way, predictably – see https://www.wsws.org/en/articles/2019/06/13/pers-j13.html – 35 billion $ worth of questionable, unreliable jet aircraft. “Rome” is burning and some people in New York are eating $295 hamburgers… (see: https://jilldennison.com/2019/06/13/295-for-a-hamburger/ )

    • Sha’Tara, the big budget items for the US are the military spending, as you note, healthcare and social security. Interest cost is a rising and substantive problem. You are so right, we could cut defense spending by eliminating things being built for an older kind of conflict. The new fights will be through technology, robotics, and social media. Putin invaded the US, accomplished what he wanted and never fired a shot, e.g. Plus, there are some major threats to our defense that our not in our budget at all – climate change and rare earth material. China owns the rare earth market. This is important as rare earth materials go in technology and our military jets. China could stop this flow and place us behind the eight ball, so easily. So, spending more money on the wrong things does not make us safe – it makes look foolish. Keith

    • Brendan, agreed. Bush was handed a surplus budget and over the objections of his Treasury Secretary Paul O’Neill, he made an unneeded tax cut. O’Neill was fired by VP Dick Cheney for his remarks. O’Neill should also be remembered for turning Alcoa around. Keith

  2. Good summation, Keith. The 2017 tax cuts for the wealthy were indeed malfeasance, and when I see the big corporations who are raking in millions and paying ZERO in taxes, it makes my blood boil. The economy cannot remain strong much longer, for that little increase in revenue comes from US, not China, not Mexico or Germany … just the U.S. consumer/taxpayer. It appears that Trump has no concern for the deficit, figures he can play his games and leave the mess for his successor to clean up. There is a price to be paid, and you and I both know who will pay it. Oh … and thanks for the ear worm!!! 🙂 ♫

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