Here’s a totally unsurprising item from the 538 Significant Digits email this morning.
President Trump’s tax cuts are already affecting America’s balance sheet: The U.S. Treasury projects that the government will borrow $955 billion this fiscal year, up from the $519 billion it borrowed last year. The cause: lower tax receipts. [The Washington Post]
The Post reports that The U.S. government is set to borrow nearly $1 trillion this year, an 84 percent jump from last year. Here is some more related bad news.
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.
Borrowing was on a steady decline after 2009 … until Trump got his tax break gift er… grift er… graft from the GOP.
What’s particularly jarring is this is the first time borrowing has jumped this much (as a share of GDP) in a non-recession time since Ronald Reagan was president, says Ernie Tedeschi, a former senior adviser to the U.S. Treasury who is now head of fiscal analysis at Evercore ISI. Under Reagan, borrowing spiked because of a buildup in the military, something Trump is advocating again.
Trump didn’t mention the debt — or the ongoing budget deficits — in his State of the Union address. The absence of any mention of the national debt was frustrating for Goldwein and others who warn that America has a major economic problem looming.
“It is terrible. Those deficits and the debt that keeps rising is a serious problem, not only in the long run, but right now,” Harvard economist Martin Feldstein, a former Reagan adviser, told Bloomberg.
The White House got a taste of just how problematic this debt situation could get this week. Investors are concerned about all the additional borrowing and the likelihood of higher inflation, which is why the interest rates on U.S. government bonds hit the highest level since 2014. That, in turn, partly drove the worst weekly sell-off in the stock market in two years.
The latest example of largesse is the GOP tax bill. It’s expected to add $1 trillion or more to the debt, according to nonpartisan analysis from the Joint Committee on Taxation (and yes, that’s after accounting for some increased economic growth).
There are limits to growth and we might be facing some consequences of believing otherwise in the not too distance future.