Tag Archives: government debt

The debt ceiling hysteria and profligate government

Source: Future of Freedom Foundation
by Richard M Ebeling

“Once again, the financial fears have been ratcheted up due to recent announcements by the U.S. Treasury Secretary, Steven Mnuchin, and the Congressional Budget Office (CBO) that by the middle of March 2018 the Federal government will have run out of room to continue borrowing due to the official debt ceiling. Some are now calling for scrapping a legal debt ceiling altogether, and allow[ing] Uncle Sam to have an unlimited line of credit. This is a bad idea.” (02/05/18)

https://www.fff.org/explore-freedom/article/debt-ceiling-hysteria-profligate-government/

The US government is set to borrow nearly $1 trillion this year, an 84 percent jump from last year

Source: MSN

“It was another crazy news week, so it’s understandable if you missed a small but important announcement from the Treasury Department: The federal government is on track to borrow nearly $1 trillion this fiscal year — Trump’s first full year in charge of the budget. That’s almost double what the government borrowed in fiscal year 2017. … The uptick in borrowing is yet another complication in the heated debates in Congress over whether to spend more money on infrastructure, the military, disaster relief and other domestic programs. The deficit is already up significantly, even before Congress allots more money to any of these areas.” [hat tip — David Klaus] [editor’s note: Neither Trump nor any other president is “in charge of the budget.” He’s required to submit a “request” to Congress (that’s been law since the 1920s), but every dime raised, borrowed and spent is raised, borrowed and spent by Congress. The only true power the president has in that equation is the veto – TLK] (02/04/18)

https://www.msn.com/en-us/news/politics/the-us-government-is-set-to-borrow-nearly-dollar1-trillion-this-year-an-84-percent-jump-from-last-year/ar-BBIDDl0

Start saving now, because Social Security is screwed

Source: Reason
by Veronique de Rugy

“The single largest government program in the United States will soon have an annual budget of $1 trillion a year. Yet even that amount isn’t sufficient to fulfill the promises it has made. If Congress doesn’t address its insolvency issues, payouts will need to be slashed by a quarter starting in fewer than 20 years. The program is Social Security, and our national pastime seems to be turning a blind eye to its dysfunctions.” (for publication 02/18)

http://reason.com/archives/2018/01/15/start-saving-now-because-socia

China: Regime officials recommend slowing or halting US bond purchases

Source: Reuters

“Officials reviewing China’s vast foreign-exchange holdings have recommended slowing or halting purchases of U.S. government bonds, seeing the market for them as becoming less attractive, Bloomberg News said on Wednesday. The report helped push yields of U.S. Treasuries to multi-month highs and caused the U.S. dollar to fall. China has the world’s biggest currency reserves, approximately $3 trillion, and is the biggest foreign holder of U.S. government debt, with $1.19 trillion in Treasuries as of October 2017, data from the Treasury Department show.” (01/10/18)

https://uk.reuters.com/article/usa-bonds-china/update-1-china-officials-recommend-slowing-or-halting-u-s-bond-purchases-bloomberg-idUKL8N1P53YU

If you can read one article on Italy only

Source: EconLog
by Alberto Mingardi

“Marco Valerio Lo Prete, using data supplied by historian Guido Pescosolido, looks at the dynamics of Italian debt through time. Until recently, it only went above 120% of GDP twice: once, in the late 1800s and once in correspondence with the WWI military efforts. In both cases borrowing was driven by political factors: first, the country had to manage the public debts of the previously independent states absorbed by the newly-formed Kingdom of Italy (beginning with Piedmont’s, the state which conquered the rest of the Peninsula) and to finance public spending in order to foster top-down industrialisation and pay for colonial endeavours; second, obviously the war was a political decision. But more recently, borrowing has been driven by the dynamics of democratic politics.” (01/04/18)

http://econlog.econlib.org/archives/2018/01/if_you_can_read.html

News flash for Jack Lew: The US government is already broke

Source: Garrison Center
by Thomas L Knapp

“As I write this, the national debt stands at more than $20.5 trillion, and per the president’s 2018 budget request, the US government continues to spend money at a rate of about $7.8 million per minute, 24 hours a day, seven days a week — about $850,000 more dollars per minute than it raises with taxes. When Jack Lew refers to ‘us’ and ‘we,’ he wants every American to assume responsibility for a ‘fair share’ of that debt. Currently, such a share would come to nearly $63,000 per US citizen. But ‘we’ didn’t borrow that money. A few hundred politicians did. Yes, they claim that ‘we’ are their co-signers. But I don’t recall offering to cover their bar tabs. Do you?” (01/02/18)

http://thegarrisoncenter.org/archives/12429

China: Central bank official suggests decentralization, Detroit-style bankruptcies for local governments

Source: Yahoo! News

“China needs to let local governments take responsibility for their finances, including allowing bankruptcies, as part of an effort to defuse their debt risks, a central bank official wrote on Monday. Central government control of the scale of local government bonds should be eliminated, while responsibility to issue and repay bonds should be held by the city or county that will actually use the funds, Xu Zhong, head of the People’s Bank of China’s research bureau, wrote in a an editorial on the financial news website Yicai. … Xu also said that China should dismantle the hukou system of internal migration control, as free movement of people promoted equal access to public services and helped resolve imbalances in finances.” (12/25/17)

https://finance.yahoo.com/news/china-needs-detroit-style-bankruptcy-debt-problems-remain-062800228–business.html

Congress’s lack of fiscal restraint hurts taxpayers

Source: Cato Institute
by Michael D Tanner

“With the divisiveness of tax reform now hidden behind the closed doors of a conference committee, Congress has returned to the only thing that restores bipartisanship on Capitol Hill: spending money. After pushing the deadline off for another two weeks, Congress must now act by December 23 in order to avoid the by-now-routine threat of a partial government shutdown. That means we should expect the usual threats and predictions of disaster, all just in time for the holidays. Current reporting suggests that Congress is likely to gather the courage to extend the deadline all the way to mid-January, just in time for us to go through it all a second time.” (12/13/17)

https://www.cato.org/publications/commentary/congresss-lack-fiscal-restraint-hurts-taxpayers

Time to shut it down

Source: Future of Freedom Foundation
by Laurence M Vance

“The specter of a government shutdown is looming once again, since funding of the federal government expires on Friday, December 8. But in a recent appearance on Fox News Sunday, Sen. John Thune (R-S.D.), the third-ranking Republican senator, stated, ‘There shouldn’t be any discussion about shutting down the government. We can make this thing work.’ … Contrary to Senator Thune, there should be a discussion about shutting down the government. The federal government’s annual budget is currently about $4 trillion. When Thune talks about making things work and negotiating he is talking about how a small portion of this $4 trillion will be spent. Democrats and Republicans are united in agreement about the vast majority of federal spending. What is never discussed is the constitutionality and legitimacy of all federal spending.” (12/06/17)

https://www.fff.org/explore-freedom/article/time-to-shut-it-down/

Venezuela’s default disaster

Source: Ludwig von Mises Institute
by Daniel Lacalle

“Socialism always promises heaven and gives hell. In the early hours of Thursday, November 2, the Maduro regime certified its latest failure with what they promised would never happen: technical default. With his usual arrogance, Maduro issued a ‘decree’ demanding ‘the refinancing and restructuring of the debt as of November 3.’ That is, default. The bad news for investors or high-yield hunters is that the likelihood of being swindled again is almost 100%.” [editor’s note: It should be noted that “investors” in state debt are “investing” on a promise that others will be robbed to pay them back with interest. They deserve to lose every dime they “invest” in that kind of enterprise – TLK] (11/20/17)

https://mises.org/wire/venezuelas-default-disaster