Budget Deficit Debate
I covered this debate in detail earlier, but let’s start with absurd nonsense.
Trump on Paying Down the Debt
That is truly Fantasyland thinking. In fact, it is so preposterous, one has to wonder if it is a purposeful lie. Then again, we are talking about Trump, so perhaps he does believe it.
Discrepancy Between Deficit and Rise in Debt
With that joke out of the way, let’s investigate the discrepancy between increase in debt and the alleged deficit from my March 19, 2019 article:
Projected US Budget Deficit Lie in Four Pictures
Data for these charts from US Government Debt, not an official government website.
Projections vs Reality
In nearly all cases, the increase in national debt is way higher than projected deficits. Why?
Because the projected deficit does not include all of the amount owed to the Social Security Trust Fund. That amount is called off-budget. But when the calendar year rolls over, the difference magically appears on the balance sheet as actual debt.
Actual and Projected Debt
Projected Deficits vs Projected Increases in Debt
That picture is where lie meets reality. Let’s total it up.
Projected Deficits vs Projected Increases in Debt Totals Through 2023
The total projected debt increase for 2018-2023 is $6.826 trillion.
The total projected deficit increase for 2018-2023 is $5.352 trillion.
Deficit Scam
Excluding Social Security from the deficit is an accounting scam.
The cumulative deficit lie for the years 2018-2023 is $1.473 trillion.
Expect Much Worse
The story is even much worse. Those numbers assume no recession through 2023.
Mike “Mish” Shedlock
It’s not just Social Security. It’s also student loans:
The social contract has been broken for a while now. And how convenient is it to have a polarized society, where the left blames the right and vice versa. Then each side has a scapegoat and nothing gets resolved, the inequality keeps rising and social unrest is the new normal. I’d like to think I’m neither left or right, but just in the centre. More than that, I often think this paradigm is nearing the end of its lifespan. Clearly, this isn’t working anymore and perhaps these are the final deathrattles of the system collapsing and dying. And I’ll say it again, it’s unregulated finance, extreme financialization or everything, especially housing that’s accelerating the fire that’s burning.
I am so tired of the BIG LIE of “Republicans are deficit hawks and Democrats and big deficit spenders”. This lying talking point gets repeated all the time. The TRUTH is that Democrats close budget holes while Republicans tear them open. When was the last surplus? Democrat Clinton. What did Obama do? Reduced the deficit his entire term in office. Republican Bush took a surplus and destroyed it with tax cuts. Republican Trump took a reducing deficit and flipped it into a wildly increasing deficit. Republicans have no interest in solving the budget problem. This (despite the identity politics BS) is enough to cause me to vote Democrat. The Republicans want to destroy. What do you want to do? Fix a problem or make it worse?
The U.S. Housing Market Crash Is Officially Here https://www.ccn.com/u-s-housing-market-crash-officially-here/
The obvious solution is to cut taxes and regulation! Get government off the backs of the people! Those lazy old people need to grab their walkers and get back to work! Bunch of takers!
You’re right – cancel SS and Medicare, get the lazy moochers back to work – there are plenty of jobs opening up in the fruit picking business and the old scroungers could help relieve the need for immigrants in our farms.
Also, we need to take the Military off of the public teat – they have plenty of arms already – how about they go and get a country or two for us so we can build a lucrative empire – a win-win – we stop paying the MIC and we get more wealth by taxing Canadians (median wealth $100K/person vs. U.S. $66K/person), Iceland (median wealth $165K/person), and other easy to invade countries. Hell, since we seem to love St. Paddy’s Day so much, let’s solve the backstop problem for the Brits by annexing Eire (median wealth $105K/person).
Other countries far richer than we are include: Australia ($181K/person median wealth), Hong Kong ($147K), NZ ($116K), and Spain ($95K).
Most people don’t even know that we pay for a really good military, but are 50% poorer than the regular Spaniard, almost 2 times poorer than the Kiwis, and almost 1/3 as wealthy as bloody Australians.
OK, now we are running a surplus, let’s give everybody good healthcare and education and deport anybody who can’t maintain a “C” average – no losers for America – or maybe we can just pick a state, say Alabama, to send them to – we’d not notice the difference, let’s face it.
BS
Your comparisons of median wealth far more reflect the distribution of wealth in various countries than the total wealth. Countries with more equality will have higher medians. US wealth per capita is still much higher, but a much narrower slice of the populations have taken it in possession.
You are repeating the MSM meme, preparing us for the abolition of SS, which is to lump medicare and SS together. It’s the medical costs which are out of control and bankrupting the federal budget as well as the household budgets. SS could be easily fixed, and would still be accumulating faster than disbursing but for the negative interest rates since the GFC (paid on their holdings). That same problem is going to bankrupt all pension funds the world over: save the banks & the rich at the cost of pensions and savers.
Webej:
Regarding point 1: If me and 10 of my friends are in a bar our median and average net worth might be $250,000. Jeff Bezos walks in and the median net worth is still $250,000, but the average is now $15 Billion – that is why we use “median” and not “average” net worth – for the vast majority of people it is far closer to reality than “average”.
Regarding point 2: I’m joking for Pete’s sake. I thought “annexing” Canada and Iceland would have given it away 😉
Trump is probably still the favorite to win 2020, so by the end of his second term we could see roughly $2T annual deficits.
I hope by now everyone realizes that no politician is going to address this, it’s “extend and pretend” from here on out. At least once we go to NIRP servicing this colossal debt will be easy!
Two things I know for sure about Social Security,, well maybe three or four..
A long time ago the Supreme Court ruled payments to SS are a Tax and not an insurance premium.
Also a long time ago the Supreme Court ruled that the government doesn’t have to give anyone any of this money. (Meaning you’re not entitled to your entitlement)!!
Also there is no money in the SS lockbox, just IOUs, and IOUs aren’t money, they are paper more worthless than paper money…
Also, but not finally, the whole thing is UnConstitutional, there is nothing in the Constitution authorizing the federal government to take money from me and give it to thee…
Oh don’t get me started Mish, I am on the record as saying this year’s deficit would be 1.2 trillion and growing fast. But, how can we know? That is a great question since we have not had a real budget in how long? What we have are continuing resolutions and the great cliff that requires they lift the debt ceiling. That debt ceiling, biggest joke in US political history.
But, you did say this and I want to STRONGLY disagree with you for a change: “Unfunded liabilities like SS add to the debt but supposedly to to the deficit until realized.”
Social Security is not an unfunded liability, and I would challenge anyone who uses that term as being biased and politically wielding an ax for the right wing.
Social Security is actually OVER FUNDED to the tune of now more than $6 trillion, that is why that much of the federal debt shows up as “intergovernmental holdings.” Now that really is a lie, intergovernmental holdings is just another way to say the money we have already stolen from your retirement check. In the end though the federal government is legally obligated to pay my social security benefits out of the general fund which took the money we overpaid.
“Legally obligated” is a catch phrase for the benefits will keep rolling no matter what, even if they have to borrow those trillions elsewhere, unfortunately that elsewhere is likely to be the Fed which will print it up and stick us all with inflation that will moot the cost of keeping the old and disabled alive. Just because they are LEGALLY OBLIGATED to pay my benefit and also to adjust that for annual inflation does not mean that I can get by on what they pay. Because the federal government and the Fed acting together control monetary policy, fiscal policy, and the printing press. They can claim a can 4 ounce can of tuna costs the same as 5 and 3/4 ounce of tuna all they want to, I just know that it costs me about twice as much as it did in 2011.
The place the whole unfunded liability meme got started was in Illinois, and only because that state pretty much has had a perfect storm of problems, and because they do not have any control over such events as 299% increase in healthcare costs since before the GFC. Or more than 165% price increase in college for their kids. And none of that is reflected in the CPI which is now nothing more than a plug number made up to promote Fed and Federal policy of handing all the wealth of this nation to the top 1%. They did not over promise benefits, they just had no idea about the depth of financialization and inflation when they promised it. REAL INFLATION is now multiples of what the headline bullshit numbers are and if you are broke and in trouble it must be YOUR fault, not the Fed or federal government that tells us prices are pretty much the same as when Clinton left office.
The real problem with the idea of unfunded liability is that businesses and people do not work on the same basis as government, and because we no longer have an annual budget that unifies income and outgo even the government does not work on that basis anymore, they should but they don’t. If they did there would be in essence a pile of cash worth over $6 trillion sitting in the head office of social security right this moment. Far more than enough to pay my benefit, at a REASONABLE raise for inflation.
Our accounting is so very fucked up it is not funny, the only countries worse are China, the EU, Japan and, well all of them, christ, look at Canada. Because you cannot mix cash accounting with accrual accounting, it does not work, doesn’t add up. Right wingers have taken advantage of this to claim our system is a failure, no matter that the wealth and claims on that wealth have not actually changed.
Well yes. Social Security surpluses (from fica withholding) are in fact what funded all the tax breaks for the super rich the past 35 years. They did not spend it, but used it to take possession of most of the wealth in the country. Instead of investing in the economy, all of it flowed into the “financial world”.
As for fucked up accounting, it is not worse in Canada or the EU or Japan. See my reply to Realist above.
I will give you another example of how and why you cannot mix cash and accrual accounting in government. Several years back the GOP was doing it’s best to kill off the postal service, even though having one is a constitutional requirement. They claimed that the USPS pension fund was about to go broke and was underfunded, so they required the post office to fund it’s pension account over a 75 year timeline. That is ridiculous, they were requiring the post office to fund pensions that will pay out on pensions for people that will not even be born in my lifetime. That required the USPS to divert all profits from operations and then some so that what was an operating profit now was a loss in the billions. This sort of thing is why the country is going to fail. The sheer corruption of such acts is more than simple government vandalism, it is intentional torching of our way of life. Yes, some things cost money, that is just too bad, they were pissed that the money was not going to Wall Street billionaires rather than to postal employees and it is a perfect example of why they should never be allowed to privatize social security, it turn our pensions into nothing more than a Wall Street slush fund.
Great post.
Who’s knows,under all the scam accounting, blatant off balance sheet fraud,big govt hiding at least a tril off the books,and that’s a low ball number,real deficit could easily be double (triple)the “official”number.
Clapper, Brennan and Comey have not only evaded the law, they have unzipped their flies and pee’d all over the Constitution.
Who cares about the budget of an entity that allows the lawlessness that Washington DC has become?
Send the crooks to prison or shut the whole thing down.
“That government which governs least governs best” — Thomas Jefferson
I dream of a photo of Trump holding onto the bars of a jail cell as he stares out.
Everyone has their fantasies… but not even Adam Schiff can come up with something to charge Trump with, and he is more crazy than@Jojo
This should be the last thing you hope for. It is one of the primary characteristics of banana republics. Heads of states can never relinquish power because their personal survival is at stake. To solve revolutions in these countries without maximum blood shed, the heads of states need to be given safe passage to some other country. It also means people in government need to use public money to build stashes of private wealth abroad.
Trump didn’t violate any laws — not even Adam Schiff has been able to fabricate an actual legal violation, and God knows Schiff tried. Nancy Pelosi knows none of Schiff’s cr@p will stick, but the mental patients in her party screamed and soiled their diapers.
If Trump gets impeached (not removed from office) just because some extremists don’t like him — the same can and will happen to every other elected official. Congress and whomever wins in 2024 (Trump already wins 2020, sorry) will get impeached over something.
No politician gets to Washington without making some enemies (which is different from violating the law). Once that genie is out of the bottle, every President will get impeached and every member of Congress too.
You are correct sir.
‘Those numbers assume no recession through 2023’.
I’m convinced there’ll be one…possibly several. ‘Luckily’ they’ve concocted with the CB’s having close to zero (or possibly negative) interestrates. If rates were ‘normal’ or ‘fair, that would be disastrous.
And indeed, by purposefully excluding the retirementboom it’s just another case of propping up numbers to fit the ‘everything-is-awesome-dude’-narrative.
In your ‘Chicago’s Death Spiral’ topic, there were some shocking numbers to observe and that’s just one (1) city!
There’s never anything disastrous about neither interest rates nor anything else being priced correctly. What’s disastrous, is mispricing, and the attendant misallocation it enables hence leads to.
The earlier debt which can’t get repaid, at market rates, is recognized as such and written off, the better. Always. Without any exception whatsoever, and entirely without any regard for whatever horror stories about scary bogeymen the children are being fed as excuses for why “thiiiiis tiiiiiime iiiiiis diiiiiiferent.”
All, as in absolutely 100.(ifinite zeros) percent all, that bailouts, QE, “liquidity support” and the rest of the drivel is, is pure, 100% theft: By those in the position to influence the nonsensical idiocy known as “monetary policy.” From everyone else. Nothing else. That such drivel eve exists, and even more so that grownups persist in falling for the obvious nonsense, is what’s disastrous. Not accurate interest rates determined by a market without intervention.
The greatest transfer of wealth indeed. And again, it’s facilitated by the governments. What happened to ‘Government of the people, by the people, for the people’? Oh wait…it’s bread and circuses, a tried and tested method! Just drown everyone in trivial bullshit, sow division and keep them distracted. Well…it’s working. (but not really)