{"id":47416,"date":"2019-07-25T11:36:51","date_gmt":"2019-07-25T16:36:51","guid":{"rendered":"https:\/\/olduvai.ca\/?p=47416"},"modified":"2019-07-25T11:36:56","modified_gmt":"2019-07-25T16:36:56","slug":"the-6-trillion-pension-bailout-is-coming","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=47416","title":{"rendered":"The $6 Trillion Pension Bailout Is Coming"},"content":{"rendered":"\n

The $6 Trillion Pension Bailout Is Coming<\/a><\/h3>\n\n\n\n

Fiscal responsibility is dead.<\/strong><\/p>\n\n\n\n

This past week, Trump announced he had reached an agreement with Congress to pass a continuing resolution which will suspend the debt ceiling until July 2021.<\/p>\n\n\n\n

The good news is that it will ONLY increase spending by just $320 billion. <\/strong><\/p>\n\n\n\n

What a bargain, right?<\/p>\n\n\n\n

It\u2019s a lie.<\/p>\n\n\n\n

That is just the \u201cstarting point\u201d<\/em> of proposed spending. Without a \u201cdebt ceiling\u201d<\/em> to constrain spending, the actual spending will be substantially higher.<\/p>\n\n\n\n

However, the $320 billion is also deceiving because that is on top of the spending we have already committed. As I noted just recently:<\/a><\/p>\n\n\n\n

\u201cIn 2018, the Federal Government spent $4.48 Trillion, which was equivalent to 22% of the nation\u2019s entire nominal GDP. Of that total spending, ONLY $3.5 Trillion was financed by Federal revenues, and $986 billion was financed through debt.<\/strong><\/em><\/p>

In other words, if 75% of all expenditures is social welfare and interest on the debt, those payments required $3.36 Trillion of the $3.5 Trillion (or 96%) of revenue coming in.\u201d<\/em> <\/strong><\/p><\/blockquote>\n\n\n\n

Do some math here.<\/p>\n\n\n\n

The U.S. spent $986 billion more than it received in revenue in 2018, which is the overall \u201cdeficit.<\/em>\u201d If you just add the $320 billion to that number you are now running a $1.3 Trillion deficit.<\/p>\n\n\n\n

Sure enough, this is precisely where I forecast we would be in December of 2017.<\/a><\/p>\n\n\n\n

\u201cOf course, the real question is how are you going to \u2018pay for it?\u2019 On the \u2018fiscal\u2019 side of the tax reform bill, without achieving accelerated rates of economic growth \u2013 \u2018the debt will balloon.\u2019 <\/em><\/p>

The reality, of course, is that is what will happen because there is absolutely NO historical evidence that cutting taxes, without offsetting cuts to spending, leads to stronger economic growth.\u201d<\/strong><\/em><\/p><\/blockquote>\n\n\n\n

\"\"<\/a><\/figure>\n\n\n\n

More importantly, Federal Tax Revenue is DECLINING.<\/strong> Such was NOT supposed to be the case, as the whole \u201ccorporate tax cut\u201d<\/em> bill was supposed to lift tax revenues due to rising incomes.<\/p>\n\n\n\n

\"\"<\/a><\/figure>\n\n\n\n

 \u2026click on the above link to read the rest of the article\u2026<\/p>\n","protected":false},"excerpt":{"rendered":"

The $6 Trillion Pension Bailout Is Coming Fiscal responsibility is dead. This past week, Trump announced he had reached an agreement with Congress to pass a continuing resolution which will suspend the debt ceiling until July 2021. The good news is that it will ONLY increase spending by just $320 billion.  What a bargain, right? […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[1816,15470,827],"class_list":["post-47416","post","type-post","status-publish","format-standard","hentry","category-economics","tag-pensions","tag-real-investment-advice","tag-united-states"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/47416","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=47416"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/47416\/revisions"}],"predecessor-version":[{"id":47417,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/47416\/revisions\/47417"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=47416"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=47416"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=47416"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}