U.S.A. BUSTED, BROKE, BORROWED TO THE HILT

U.S.A. BUSTED, BROKE, BORROWED TO THE HILT

CBO OVERVIEW:  Outlook Before Passage of Biden’s $1.9 Trillion Stimulus

The Congressional Budget Office projections of federal budget deficits, debt, revenues, and spending were published on February 1, 2021 based on current laws. Looks like Washington is destined to spend us all into the poorhouse.

* Deficits— CBO projects a federal budget deficit of $2.3 trillion in 2021, that’s 10.3% of gross domestic product (GDP), the second largest since 1945, exceeded only by the 14.9 percent shortfall recorded last year.
* Projections are for annual deficits averaging $1.2 trillion a year from 2022 to 2031 and exceed their 50-year average.
* Debt. Federal debt held by the public—Was 100% of GDP at end of fiscal year 2020—is projected to reach 102 percent of GDP at the end of 2021.
* Revenues. Federal revenues are projected to generally increase relative to GDP as a result of the expiration of temporary pandemic-related provisions, scheduled increases in taxes, and other factors.
* Outlays. Projected outlays decline relative to GDP for the next few years, as pandemic-related spending wanes and low interest rates persist. Outlays then increase relative to GDP, owing to rising interest costs and greater spending for major entitlement programs.
* Inflation Rising— CBO now projects stronger economic activity, higher inflation, and higher interest rates, boosting both revenues and outlays.
* The Economy— With increased real (inflation-adjusted) GDP is projected to grow by 3.7 percent in 2021, returning to its prepandemic level by the middle of the year.
* Growth— CBO expects 2.6% average over the 2021–2025 period.

AUSTIN REPORT THOUGHTS: We would expect GDP growth to exceed 2.6% in the coming year because we believe inflation will be higher than that. If we’re correct, we should plan on a long period of stagflation when the economy stutterers around and inflation eats up the gains.

Stagflation or a period of higher inflation will negatively impact all of the CBO projections.

As Washington Mulls Over Another $1.9 Trillion on Stimulus

The nation’s so-called “trust funds” are rapidly running out of funds and could go broke even faster than the current dire forecasts.

  • CBO projects Highway Trust Fund insolvency in FY 2022.
  • Medicare Hospital Insurance Trust Fund goes broke in FY 2026.
  • Social Security Old-Age and Survivors Insurance Trust Fund insolvency appears likely in calendar year 2032.

While our broke nation is running on borrowed money already, the National Debt could be even higher than the CBO projected in early February 2021.

Looking ahead, if policymakers enact $2 Trillion of additional fiscal relief, extend expiring tax provisions, and grow annual appropriations along with GDP, debt would total 120 percent of GDP by 2031.

The government’s own forecasts are awful, just awful. We won’t even comment further. Please plan on taking care of your own future and retirement. Because I repeat…

The U.S.A. IS BUSTED, BROKE, BORROWED TO THE HILT.

(Artwork from Stickerheads.Com)