Congressional Budget Office: The US Government Is Flat Broke

Slip sliding away, slip sliding away

You know the nearer your destination,

The more you’re slip sliding away

Paul Simon

We reported the latest figures from the Congressional Budget Office (CBO). They were shocking…but not surprising.

We remind you that they are just part of a big picture. It is the picture of a degenerate empire, slip sliding since 1999…and now, desperately trying to hold itself together with printing press money.

But it’s gone so far down this road, it can’t turn around. Each time there is a ‘crisis’, it has to print more. And the more it prints, the worse the next crisis becomes.

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Big story

Meanwhile, the people are distracted. Waiting for the stimmy cheques or gawking at the clowns in their capital city…they hardly notice.

Do you really think it matters that Janet Yellen is a woman rather than a man? Or how many BIPOCs attend cabinet meetings? Will those be the big stories of our time?

Or how about ‘Russian aggression’…or Chinese cunning? Or the impeachment of Donald Trump? Or the weather in Texas?

What really matters to a nation? Money and war. War and money. Let either one get out of control, and you are headed for trouble.

Which is why this is the story of our time…the big story of the 21st century…the story of how a great empire slid into the ditch.

But it’s not an original tale. So today, we skip ahead…guessing how it might turn out.

Flat broke

First, let’s recall the basic numbers from the CBO…

  • The budget deficit will total $2.3 trillion — 10.3% of GDP — in FY21 and total $12.3 trillion (4.4% of GDP) over the next decade.
  • Debt will reach a new record as a share of the economy, growing from over 79% of GDP at the end of FY 2019 to over 102% of GDP by the end of 2021…and will grow another $13.6 trillion by the end of 2031, ultimately reaching $35.3 trillion.
  • Four major trust funds are on a path toward insolvency. CBO projects Highway Trust Fund insolvency in FY22, Medicare Hospital Insurance Trust Fund insolvency in FY26. Social Security Old-Age and Survivors Insurance Trust Fund insolvency appears likely in calendar year 2032 and Social Security Disability Insurance Trust Fund insolvency in the mid-2030s.
  • Debt could be even higher than projected. If policymakers enact $2 trillion of additional fiscal relief, extend expiring tax provisions, and grow annual appropriations with GDP, debt would total 120% of GDP by 2031.

Now, let’s add some numbers of our own.

This year, the feds will collect about $3.8 trillion in taxes. But they will spend $380 billion on interest on existing debt (at the lowest rates in history) and about $4 trillion on ‘transfer payments’ (depending on how much stimmy the feds give out).

You see the problem clearly, as we do.

More than 100% of the feds’ revenue is spent before they ever begin governing. The ‘transfer payments’ are things such as Obamacare, Social Security, and supplemental unemployment benefits — moving money from one pocket to another.

But that leaves nothing for the Department of Defense. Nothing for the fight against COVID-19. Nothing for the thousands of boondoggles and bamboozles finagled over the years.

In other words, the federal government is flat broke. It has not a single penny with which to fulfill its core responsibilities. Not a farthing for the courts. Not a peso for the Pentagon. And not a dollar for infrastructure…research…climate change…or anything else.

The way it works

But those numbers — as awful as they are — will get much worse. And then, they will spin out into absurdity.

Because the CBO’s estimates do not take economic setbacks, political jackassery, and market corrections into account. They assume things go on pretty much as they are, with no significant missteps…market crashes…interest rate increases…virus attacks…or recessions.

That is not the way it works.

Things go wrong. And the first thing to go wrong (which could begin any moment) is that the markets will blow up. They are in bubbleland now, searching for sharp objects.

Then, in a panic, the authorities will rush out more stimmy cheques.

No alternative

And here, Dear Reader, let us interrupt to connect a simple — but important — set of dots.

There are no ‘decisions’ to be made. There are no choices. There are no real alternatives. No ‘solutions’.

It’s ‘inflate or die’ remember?

And nobody wants to die…neither Republicans nor Democrats…nor any of the vast army of apparatchiks, hangers-on, lobbyists, members of Congress, media…deep staters…insiders…elite cronies…

…nor the whole kit and kaboodle, the upper 10%, who control the government and have the most to lose when its system of fake money finance blows up.

Once you start down that road…you can’t even slow down. Because any attempt to raise interest rates to a more normal level…or ease off on the printing press…or cut the deficits…or trim the debt…will bring the very crisis the elite are so desperate to avoid.

So, what happens?

It just gets wackier and wackier. And the more slip sliding you do, the nearer your destination you get.

Tune in tomorrow for more wackiness — on Wall Street.


Dan Denning Signature

Bill Bonner,
For The Rum Rebellion

PS: In a brand new report, market expert Vern Gowdie warns of the dangers waiting in a post-COVID-19 world. Plus, he outlines the steps you should take now to protect your wealth. Learn more.

Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries.

A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America’s most respected authorities.

Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally.

With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance.

Bill has been a weekly contributor to The Rum Rebellion.

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