America’s Fiscal Doomsday Machine Must Be Stopped
Posted by freedomforall 6 days, 4 hours ago to Economics
Excerpt:
"The following is Chapter One of David Stockman’s latest book, How To Cut $2 Trillion: A Blueprint From Ronald Reagan’s Budget Cutter To Musk, Ramaswamy and The DOGE Team.
The DOGE $2 trillion budget savings goal is crucial to the very future of constitutional democracy and capitalist prosperity in America. In fact, the soaring public debt is now so out of control that the Federal budget threatens to become a self-fueling financial doomsday machine.
Recall this sequence. When Ronald Reagan was elected in 1980 on a call to bring the nation’s inflationary budget under control, the public debt was $930 billion and about 30% of GDP.
By the time Donald Trump was elected the first time it had erupted to $20 trillion, which has now become $36 trillion and 125% of GDP. Moreover, by the end of this decade the Federal fiscal equation will be going supercritical without sweeping budget reductions at the level of the DOGE target. Thus, by FY 2034 the annual baseline deficit according to CBO will total $2.9 trillion and 7% of GDP.
Yet even these enormous figures are based on a Rosy Scenario fairy tale. Namely, that Congress will never again adopt another spending increase or tax cut, including the impending $5 trillion extension of the expiring 2017 Trump tax cuts. It also conveniently assumes there will be no recessions, no inflation recurrence, no interest rate flare-ups nor any other economic crises for the remainder of this decade and forever thereafter.
Furthermore, it presumes that these surging red ink totals and soaring debt service expenses would be copacetic in the bond pits just the same. That is, CBO inexplicably projects that 7% of GDP deficits and annual interest expense of $1.7 trillion or 4.1% of GDP by 2034 would be compatible with a weighted average yield on nearly $60 trillion of public debt of just 3.4%.
Yes, and if dogs could whistle the world would be a chorus! Give the average yield just another 250 basis points, however, and now you have $3.1 trillion of annual debt service expense and a $4 trillion annual deficit by 2034. In short, there is a doom-loop building inside the Federal fiscal equation and nothing short of the DOGE target of $2 trillion of annual budget savings by the end of this decade can reverse its explosive materialization in the years beyond.
If sweeping budget retrenchment does not occur soon, in fact, soaring interest expense will ignite a veritable fiscal wildfire. On paper, the public debt would power upward unabated to $150 trillion or 166% of GDP by mid-century (2054) under CBO’s current Rosy Scenario projections. Of course, long before the debt actually hits this staggering figure, the whole system would implode. Every remnant of America as we now know it would go down the tubes."
"The following is Chapter One of David Stockman’s latest book, How To Cut $2 Trillion: A Blueprint From Ronald Reagan’s Budget Cutter To Musk, Ramaswamy and The DOGE Team.
The DOGE $2 trillion budget savings goal is crucial to the very future of constitutional democracy and capitalist prosperity in America. In fact, the soaring public debt is now so out of control that the Federal budget threatens to become a self-fueling financial doomsday machine.
Recall this sequence. When Ronald Reagan was elected in 1980 on a call to bring the nation’s inflationary budget under control, the public debt was $930 billion and about 30% of GDP.
By the time Donald Trump was elected the first time it had erupted to $20 trillion, which has now become $36 trillion and 125% of GDP. Moreover, by the end of this decade the Federal fiscal equation will be going supercritical without sweeping budget reductions at the level of the DOGE target. Thus, by FY 2034 the annual baseline deficit according to CBO will total $2.9 trillion and 7% of GDP.
Yet even these enormous figures are based on a Rosy Scenario fairy tale. Namely, that Congress will never again adopt another spending increase or tax cut, including the impending $5 trillion extension of the expiring 2017 Trump tax cuts. It also conveniently assumes there will be no recessions, no inflation recurrence, no interest rate flare-ups nor any other economic crises for the remainder of this decade and forever thereafter.
Furthermore, it presumes that these surging red ink totals and soaring debt service expenses would be copacetic in the bond pits just the same. That is, CBO inexplicably projects that 7% of GDP deficits and annual interest expense of $1.7 trillion or 4.1% of GDP by 2034 would be compatible with a weighted average yield on nearly $60 trillion of public debt of just 3.4%.
Yes, and if dogs could whistle the world would be a chorus! Give the average yield just another 250 basis points, however, and now you have $3.1 trillion of annual debt service expense and a $4 trillion annual deficit by 2034. In short, there is a doom-loop building inside the Federal fiscal equation and nothing short of the DOGE target of $2 trillion of annual budget savings by the end of this decade can reverse its explosive materialization in the years beyond.
If sweeping budget retrenchment does not occur soon, in fact, soaring interest expense will ignite a veritable fiscal wildfire. On paper, the public debt would power upward unabated to $150 trillion or 166% of GDP by mid-century (2054) under CBO’s current Rosy Scenario projections. Of course, long before the debt actually hits this staggering figure, the whole system would implode. Every remnant of America as we now know it would go down the tubes."
Trump is cranking along in this direction. Maybe no enough, but he is having an effect!
They should concentrate on a package on getting people out of social security and kill off medicare/medicaid, too.
Those are the deadliest spending programs.
That might distract the left and the media while the other reforms happen behind the scenes.
The Hidden History Of The Incredibly Evil Khazarian Mafia: What would be today the R0th$ch!ld family.
The evil destroying our great Republic today, began many centuries ago.
It is more sick and genuinely evil than anything you could possibly imagine.
https://youtu.be/ClwIj3x24Q4?t=28
put off for a time, yes
but all that keeps out paper money having value is the belief that it does
we all know different, it can be made worthless quite quickly, as we saw with the biden the usurper admin
1) Nationalize the Federal Reserve. We bailed them out enough to justify this without excuse!
2) Continue selling bonds at 7% tax free for INDIVIDUALS (but banks only get 5%)
3) Change the fed window (where banks lever up the balance sheets). 1% on the first 7 Levers. 2% on 8-12 levers, 3% on 13-18, 4% on 19-25, 7% on 26-30, 15% on 31 and above. (insanity should cost)
This will immediately RETURN more money in interest from the Fed Window than we pay (most banks are levered 15:1, CB was 42:1 in 2007).
This would force banks to offer CDs at higher rates than the Fed Window Rate, to keep their levers down.
The 7% untaxed income would beat a risky stock market investment.
AND the government would be COLLECTING MULTIPLES of the 7% it pays out, due to the leverage the banks need to survive.
There is ZERO NEED at this point for PERSONAL INCOME Tax. Although this process would take about 10yrs to pay down the existing debt. It would lead us to be DEBT FREE.
Warning. The bankers would KILL every man, woman and child on the planet before they let this happen.
It is ACTUALLY that easy.
Furthermore, you could adjust the rates at the window to slow down or speed up the economy.
BUT (huge point), you RISK dropping the CD rates and pissing off large segments of the population who can now point to who did it!!!
One of my absolute favorite books is Robert J. Ringer's "Restoring the American Dream", which he wrote in 1979. I keep one copy for me, and another copy to loan out (and get back!) He described, in detail, then, what would happen when the US inflation accelerated up and went asymptotic - vertical. He stressed, the longer we hold off the collapse, the worse it's going to be, The debt is now in the tens of trillions, instead of billions. So far it's going exactly the way he described, except now it's ten thousand times as bad. If the system fails, it won't be a depression like 1929. We'll be back in the middle ages. If Trump's administration can't get a handle on it, I'm afraid that having your own Gulch for your friends and family to retreat to won't be much help.