Home » Posts tagged 'us budget'

Tag Archives: us budget

Olduvai
Click on image to purchase

Olduvai III: Catacylsm
Click on image to purchase

Post categories

Post Archives by Category

Trump Administration on Track for $1 Trillion Budget Deficit This Year

November 20, 2018

Trump Administration on Track for $1 Trillion Budget Deficit This Year

The Trump administration is on track to post a 2019 fiscal year budget deficit of over $1 trillion. These are the kind of budget deficits we would expect to see during a deep recession, not an “economic boom.”

The government got off to a good start at achieving this illustrious achievement last month. According to the Treasury Department report, the deficit came in at $100.5 billion in October. That represents a 58 percent increase from the $63 billion deficit recorded in October 2017. Spending rose 18 percent year-on-year. Revenues only increased by 7 percent.The month-on-month increase was impacted by a quirk in the calendar. Total outlays were much higher this October compared to last year because Social Security payments for October 2017 went out in September due to Oct. 1 falling on the weekend. Nevertheless, we should have seen a decrease in this year’s September outlays compared to last year and that didn’t happen. The September 2018 deficit was significantly bigger (119.116) than September 2017 ($7.886 billion) even without the October Social Security payments falling in September this year. The bottom line is spending is going up year-over-year.

Spending last month continued the pace of the last fiscal year. The federal government ended 2018 with the largest budget deficit since 2012. Uncle Sam ended 2018 $779 billion in the red, adding to the ballooning national debt. The CBO forecast this year’s deficit will come in close to $1 trillion. The current Treasury Department estimate projects a total fiscal 2019 deficit over the $1 trillion mark, coming in at $1.085 trillion.

The national debt expanded by more than $1 trillion in fiscal 2018. It currently stands at over $21.7 trillion. According to data released by the Treasury Department, fiscal 2018 gave us the sixth-largest fiscal-year debt increase in the history of the United States. (If you’re wondering how the debt can grow by a larger number than the annual deficit, economist Mark Brandly explains here.)

…click on the above link to read the rest of the article…

US Spending On Interest Hits All Time High As Budget Deficit In Trump’s First Year Soars To $779 Billion

October 15, 2018

US Spending On Interest Hits All Time High As Budget Deficit In Trump’s First Year Soars To $779 Billion 

One month ago we already knew that the U.S. budget deficit for the 2018 fiscal year – Trump’s first full year in office – would be jarring after the August deficit soared to $211 billion, nearly double the deficit gap from one year ago (largely due to calendar quirks) which on a cumulative basis for the first 11 months of the fiscal year was a staggering $895 billion, $222 billion or 39% more than the previous year. This was largely due to outlays which climbed 7% while revenue rose a mere 1%.

Today at 2pm we got official confirmation of the rapid expansion in the US budget deficit when the Treasury announced that in Trumps first full fiscal year as president, the U.S. budget deficit grew 17% to $779 billion from $666 billion…

… the highest full year total since 2012 amid tax cuts and spending increases, if below the trailing 12 month total as of August which, as noted above, was a whopping $895 billion.

The budget gap for the 12 month period ended September was 17% greater than the same 12-month period a year earlier, as spending rose 3.2% and revenue gained just 0.4%.

The deficit as a share of GDP was 3.9% in fiscal 2018, up 0.4% point from the prior year.

To fund this deficit, the U.S. government borrowed $1.08 trillion from the public in Fiscal 2018, more than double the amount borrowed in 2017 ($498.3 billion) and the most borrowed from the public in a fiscal year since FY’12.

There was some good news: contrary to more pessimistic expectations, the surplus for the fiscal year’s final month of September jumped to $119 billion, the largest windfall for the last month of any fiscal year on record. However, like in August, there were calendar effects in play – and if not for timing shifts, last month’s surplus would have been just $44BN, $7BN (13%) less than Sep ’17 surplus.

…click on the above link to read the rest of the article…

Debts & Deficits: A Slow Motion Train Wreck

October 4, 2018

Debts & Deficits: A Slow Motion Train Wreck

Last Friday, I discussed that without much fanfare or public discussion, Congress decided to push the U.S. into deeper fiscal irresponsibility with the passage of another Continuing Resolution (CR). To wit:

“The House on Wednesday passed an $854 billion spending bill to avert an October shutdown, funding large swaths of the government while pushing the funding deadline for others until Dec. 7.

The bill passed by 361-61, a week after the Senate passed an identical measure by a vote of 93-7.”

Without the passage of the C.R. the government was facing a “shut-down” just prior to the mid-term elections. So, rather than doing what is fiscally responsible for the long-term solvency and financial health of the country, not to mention the generations to come, they decided it was far more important to get re-elected into office.

As I noted last week:

“For almost a decade, Congress has failed to pass, and operate, underneath a budget. Of course, without any repercussions from voters in demanding that Congress ‘does their job,’ the path to fiscal insolvency continues to grow.

The Committee For A Responsible Federal Budget made the following statement:

“We’re pleased policymakers have likely avoided a shutdown and actually appropriated most of this year’s discretionary budget on time. But let’s not forget that Congress did so without a budget and had to grease the wheels with $153 billion to pass these bills. That isn’t function; it’s a fiscal free-for-all.”

Of course, with trillion-dollar deficits just around the corner, the negative impact from unbridled spending and debt increases will begin to reverse the positive effects from deregulation and tax reform.”

…click on the above link to read the rest of the article…

Albert Edwards: “We Just Had A Small Taste Of The Coming Financial Collapse” 

February 14, 2018

Albert Edwards: “We Just Had A Small Taste Of The Coming Financial Collapse” 

What is the outcome when three market skeptics sit down for dinner to discuss the future of the global economy? Whatever it is, it’s hardly optimistic.

In his latest note released moments after the big CPI upside surprise and titled, what else, “We just had a small taste of coming financial collapse. Still feeling lucky?“, SocGen’s permabearish Albert Edwards writes that he had dinner this week with “two of the great, London based, sellside macro analysts,” George Magnus (formally UBS Chief Economist and now at the China Centre, Oxford University), and Nomura’s Bob Janjuah. This is what was discussed:

In the aftermath of last week’s surge in equity volatility among many of the topics we discussed was the extraordinary ballooning of the US budget towards 6% of GDP at this late stage of the cycle. My view is that this fiscal expansion is probably the most foolhardy escapade in modern economic policy history.

Here Edwards posits that while he agrees that US corporate taxation is anomalously high, “it is the timing of the fiscal stimulus that is utterly ridiculous and will only accelerate the collapse of US financial markets as the Fed hikes rates even more quickly.”

That also happens to be his key thesis: Trump’s tax cuts will so overheat the economy, that the outcome will be another deflationary crash.

While he returns to the topic of the unprecedented fiscal stimulus at a time when the economy already appears to be overheating, Edwards first points out two charts we showed last week, namely the technical breakout in the 10Y and what that could mean for risk assets. Quote Edwards:

…click on the above link to read the rest of the article…

Budget Woes Sign of a Dysfunctional Empire

February 13, 2018

Budget Woes Sign of a Dysfunctional Empire

The bloated military budget is justified on the assumption that the United States can and should police the entire world, but this approach is fundamentally unsustainable, warns Jonathan Marshall.

President Donald Trump’s latest $4.4 trillion budget proposal calls for boosting military spending by nearly $200 billion over the next two years, and would balloon the national debt by more than $7 trillion over the next decade. Pundits proclaim it “dead on arrival.”

The Pentagon, headquarters of the U.S. Defense Department, as viewed with the Potomac River and Washington, D.C., in the background. (Defense Department photo)

But the likely alternative, based on the recent congressional budget accord, will be an equally irresponsible combination of sky-high military spending and even more borrowing – signs of a dysfunctional empire unable to manage its decline intelligently.

The U.S. national debt now exceeds $20 trillion, or $170,000 per taxpayer. When the number was smaller two years ago, under President Obama, Senate Majority Leader Mitch McConnell called it “dangerous and unacceptable.” Yet, following last December’s massive corporate and personal tax cut, and the subsequent agreement on new spending targets, Congress now envisions adding $15 trillion to the federal government’s debt over the next decade.

No serious analyst predicts any immediate disaster, but fast-rising levels of public debt, combined with extremely low levels of private savings, could set the United States up for another financial crisis. If interest rates climb, high levels of debt can rapidly drive up federal spending on interest. If another recession strikes, slashing federal revenues, the burden of debt can also soar.

While many domestic programs are slated to grow, a major contributor to the U.S. debt burden will be soaring military spending. The recent budget accord calls for feeding the military about $80 billion more this year, and an additional $16 billion more the next. The increase alone exceeds Russia’s entire military budget ($69 billion in 2016, the most recent year for which comparative data are available).

…click on the above link to read the rest of the article…

U.S. Mandates Biggest Non-Emergency Strategic Oil Selloff

February 13, 2018

U.S. Mandates Biggest Non-Emergency Strategic Oil Selloff

Crude SPR

The budget deal that the U.S. Congress passed and President Donald Trump signed into law last Friday calls for selling 100 million barrels of the Strategic Petroleum Reserve (SPR) by 2027 to help fund the government.

The sale of 100 million barrels of crude oil in the next decade would represent the largest non-emergency sell-off of strategic oil reserves and would equate to some 15 percent of the current stockpiles in the SPR.

The mandate for the SPR sale has drawn criticism because, some experts say, it would blunt the purpose of the strategic reserve to mitigate major global oil supply disruptions or price shocks. Other critics have said that tapping the emergency oil reserve for non-energy needs of the government is short-sighted, and that the SPR should not be used as a “government ATM.”

The Bipartisan Budget Act of 2018 mandates the Secretary of Energy to draw down and sell from the SPR a total of 30 million barrels of crude oil between fiscal years 2022 and 2025; another 35 million barrels during fiscal year 2026; and additional 35 million barrels in fiscal year 2027. In addition, under a budget deal from 2015, the Secretary of Energy is authorized to draw down up to US$350 million worth of crude oil from the SPR in the 2018 fiscal year to use for modernization of the reserve.

The budget deal also reduces the minimum required level in the reserve under which no drawdowns can be made, to 350 million barrels from 450 million barrels.

According to the Congressional Budget Office, the sale of the 100 million barrels from the SPR would generate US$6.36 billion between 2018 and 2027.

As of February 2, 2018, the SPR held a total of 665.1 million barrels of crude oil, while the current storage capacity is 713.5 million barrels, according to the Department of Energy. The average price paid for oil in the Reserve is $29.70 per barrel.

…click on the above link to read the rest of the article…

David Stockman On CNBC: ‘We’re On The Fiscal Titanic”

October 1, 2015

David Stockman On CNBC: ‘We’re On The Fiscal Titanic”

A government shutdown would force Congress to address fiscal issues before they reach unmanageable levels, a former Reagan administration official contended Wednesday.

“We’re on the fiscal Titanic and we’re going to hit something hard and immovable one of these days,” said David Stockman, director of the Office of Management and Budget from 1981 to 1985, in a CNBC “Closing Bell” interview.

The House of Representatives and Senate on Wednesday passed a last-minute stopgap spending bill that will keep the federal government open through Dec. 11 pending President Barack Obama’s signature. But another budget battle will likely ensue then, as Congress remains divided over federal funding for women’s health organization Planned Parenthood.

Read MoreHouse passes legislation to avoid shutdown

Many in Congress have opposed a shutdown, as a government closure can put some federal employees temporarily out of work or delay their pay. Stockman contends it could have a positive effect by making lawmakers address spending and debt issues.

He called for entitlement and defense spending reform. He also argued that easy monetary policy from central banks has made lawmakers less likely to address the deficit.

Still, Stockman did not clearly outline why a shutdown would force lawmakers to make significant budget changes.

Congressional Leaders Reach Deal on Spending – NYTimes.com

December 10, 2014

Congressional Leaders Reach Deal on Spending – NYTimes.com.

Congressional leaders reached a deal Tuesday on a more than $1 trillion spending package that would fund most of the federal government through the current fiscal year.

But because negotiations on the package dragged over policy details, House lawmakers also prepared to move on a short-term spending measure that would avert a government shutdown if Congress cannot pass the larger bill by Thursday, when the current funding expires.

Even with nettlesome last-minute issues, leaders in both parties expressed confidence that they would be able to keep the government running. Lawmakers battled behind the scenes over dozens of additional policy provisions ranging from the Environmental Protection Agency’s jurisdiction over some bodies of water to the District of Columbia’s marijuana laws to matters of campaign finance.

The big spending package, which congressional leaders had hoped to have ready on Monday, did not come until Tuesday evening. The final legislation would largely keep domestic funding at current levels, while providing more money to fight various crises abroad.

…click on the above link to read the rest of the article…

COMBAT VS. CLIMATE: The Military and Climate Security Budgets Compared – IPS

October 26, 2014

COMBAT VS. CLIMATE: The Military and Climate Security Budgets Compared – IPS.

As the U.S. debates the President’s plan for new military engagement, hundreds of thousands converged on New York to urge the world’s nations to take stronger action against the threat of climate change.  A new report connects these two issues, and finds that the gap between U.S. spending on traditional instruments of military force and on averting climate catastrophe has narrowed slightly.  Between 2008 and 2013, the proportion of security spending on climate change grew from 1% of military spending to 4%.

The report argues that a change from 1% to 4% of security spending is not commensurate with the role U.S. military strategy now assigns to climate change: as a major threat to U.S. security. Nor is it remotely sufficient to bring greenhouse gas emissions under control.

The U.S. balance between military and climate security spending compares unfavorably to the record of its nearest “peer competitor,” China.  Although China’s environmental record is unquestionably problematic, it strikes a far better balance than the U.S. in the allocation of its spending on military force and on climate change.  Its climate security spending, at $162 billion, nearly equals its military spending, at $188.5 billion.

Other Key Findings:

…click on the above link to read the rest of the article…

Olduvai IV: Courage
Click on image to read excerpts

Olduvai II: Exodus
Click on image to purchase

Click on image to purchase @ FriesenPress