The federal government added another $200 billion-plus to the budget deficit in August, pushing the fiscal 2020 budget shortfall to over $3 trillion with one month still left in the fiscal year.
Uncle Sam continues to rack up enormous monthly budget deficits. The August shortfall came in at $200.1 billion, according to the Treasury Department’s Monthly Treasury Statement, pushing the fiscal 2020 budget shortfall to $3.01 trillion. That’s more than double the previous record deficit of 1.413 trillion set in FY 2009 at the height of the financial crisis.
As of Sept. 10, the national debt stood at $26.71 trillion. That equates to $214,844 for every American taxpayer.
The debt-to-GDP ratio stands at 136.73%. Despite the lack of concern in the mainstream, debt has consequences. Studies have shown that a debt to GDP ratio over 90% retards economic growth by about 30%. This throws cold water on the Republican mantra “we can grow ourselves out of the debt.”
The Trump administration continues to spend money at a blistering pace. The federal government blew threw another $423 billion last month alone. For FY 2020, the administration has spent $6.054 billion with one month left to go.
And there is no sign that the spending will end any time soon.
In fact, the Trump administration wants to spend even more. Within days of the latest Treasury report, Secretary Treasury Steve Mnuchin called for more stimulus spending and said “now is not the time to worry about shrinking the deficit.”
That prompted Peter Schoff to tweet, “But before Covid when the economy was supposedly booming, he was not worried about the deficits either. In other words, it’s never the time to worry about the deficits,” adding in a second tweet, “The only time Republicans worry about deficits is when they’re not in power and are not really in a position to do anything to shrink them.”
Most policy-makers and pundits argue that this massive spending spree is necessary to “support the economy” during the COVID-19 crisis and they dismiss the surging deficits and ballooning national debt as a product of “emergency measures.” But the Trump administration had a spending problem long before the coronavirus pandemic. This was a continuation of the Obama administration’s spending problem The federal government was spending as if there was a major economic crisis before the current economic crisis.
In fiscal 2019, the Trump administration ran the fifth-biggest deficit in history, and through the first two months of fiscal 2020, the deficit was already 12 percent over 2019’s huge Obama-like number and was on track to eclipse $1 trillion. Prior to this year, the US government had only run deficits over $1 trillion four times, all during the Great Recession. We were approaching that number prior to the pandemic, despite what Trump kept calling “the greatest economy in the history of America.”
In the past, there was at least some rhetorical opposition to profligate spending, even if neither party actually addressed the issue. Despite Keynesian claims that the spending was necessary during the Obama years to stimulate the economy in the midst of the Great Recession, the (at the time) historic deficit set off a right-wing firestorm and birthed the Tea Party. With a Republican now sitting in the Oval Office today and spending magnitudes higher — crickets. Today, virtually nobody even seems concerned about the massive deficits and surging national debt. The mainstream financial media barely even mentions the monthly deficits anymore.
But at some point, somebody has to pay for all this. As the saying goes – there’s no such thing as a free lunch. We are all on the hook for the massive bill. We (and our children and grandchildren) will pay for this down the road – either through higher taxes or higher inflation – most likely both.
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