Digging, Deeper and Deeper

In case you missed the news earlier today, the federal government’s deficit jumped to $779 billion in the fiscal year just ended. That’s a 17 percent increase over the previous fiscal period.

An escalating deficit late in an expansionary economic cycle is unprecedented. But under the self-proclaimed King of Debt, it’s hardly surprising. All he needed was a Republican-controlled Congress that doesn’t give a damn about deficits. And that’s exactly what he got.

The obvious question is, how will the federal government be able to respond to the next recession? No one knows. We’re in unchartered waters. Close to shore. Where rocks can bash your ship into smithereens if you’re not careful. And extremely lucky.

In the meantime, keep an eye on that Medicare and Social Security. They’ll be coming for that next.

What the Books of a Declining Empire Look Like

Don’t say we weren’t warned. (But, of course, it’s likely we will later say we didn’t know the risks simply because we are loathe to take responsibility for our own actions.)

As the chart demonstrates, the current Congress has taken actions in the past six weeks that will inflate the deficit substantially. Yes, it’s true: the Republicans have gone from the party who pretended to care about the deficit to the one that doesn’t give a damn about it, even in public. Not that Democrats are any better, of course. They’ve done their fair share over the years to create this fiscal mess. And, of course, no one ever thought the president would be fiscally responsible. After all, he’s the one who drove businesses into bankruptcy and had a university go belly up. I suppose it’s only appropriate that he be the one to lead the country down the path of fiscal demise.

As a grandfather, the worst part of this (in addition to what it means for Medicare and Social Security, which, of course, isn’t good) is what it will do to your generation, Vera. Simply put, your standard of living will be lower than it could and should have been. All because of the selfish decisions of the people who came before you.

Obviously, not enough people share my concern. If they did, then we wouldn’t be seeing this fiscal train wreck in action.

In any case, it is what it is. There may not be anything you can do about it other than to keep it in mind as you make your own financial and career decisions. And to realize America’s best days might be behind it.

P.S. The below chart shows what I already knew but that runs counter to popular opinion, namely, that Republicans run bigger deficits than Democrats.

P.S. # 2 – The president released his budget today. So we now know, using conservative assumptions, that  total US debt is projected to rise from $20.5 trillion today to an unprecedented $29.9 trillion in 2028.

The last chairperson of the Federal Reserve Bank said this should keep people up at night. Apparently, it doesn’t. But it will someday.

P.S. # 3 – Oh, by the way, here’s what Mr. Trump said about our national deficit in December 2015:

If we don’t … balance up our budget — at least get it damn close and soon — we’re not going to have a nation anymore.

Not that I consider him a reliable source. But even a broken clock is right twice a day.