Thursday, December 27, 2018

Going under

Hot Air: "A Stunner: National Debt Interest Will Soon Exceed National Defense Spending."
The Congressional Budget Office estimates the interest payments will surpass Medicaid costs within 18 months and that they will exceed all national defense spending by 2023.

By 2025, the CBO figures interest costs will surge past the combined totals of all non-defense discretionary programs together, including funding for national parks, scientific research, health care, education, the court system and infrastructure.

Between now and 2023 nearly three-quarters of the federal debt will mature and must be refinanced at whatever the presumably higher interest rates are in effect then.
As the federal budget transitions into auto-pilot spending, mandatory budget obligations will force out discretionary spending, the things we call the "government."  Who's going to care if the government shuts down when there's one forest ranger left?


Anonymous said...

But these numbers are only true if we assume the 2017 tax cut somehow, impossibly WON'T pay for itself. Kudlow and Mnuchin wouldn't have lied about that.

Eric said...

How much longer will we wander through this wasteland that Trump has engendered?

"Treasury: Federal Budget Surplus for April Largest on Record, Driven by Tax Deposits"

Anonymous said...

The congressional budget projects that the federal deficit will climb by 39 percent this year, while revenues from corporate taxation fall by 27 percent. Inflation, driven in part by the deficit expansion, has led to real wage declines for the majority of Americans - that's something that didn't occur even during the tepid wage gains during Obama's years. Labor's share of growth has managed to shrink, despite coinciding with low official unemployment stats. And that's during an economic expansion - thank goodness no one projects the economy to contract or recess in the next year.

Also, I checked my mail but my promised 10% middle class tax cut isn't there yet. I'll check again tomorrow.

Eric said...

"The congressional budget projects that the federal deficit will climb by 39 percent this year because of rising entitlement obligations."

"While revenues from corporate taxation fall by 27 percent, revenues from individual income tax - which generate four times more revenue than corporate tax - rose 8%."

"Wage growth during the Obama years was tepid."


Eric said...

Also: "In the most recent quarter, real wages grew about 0.2 percent over last year, and a guesstimate based on October and November numbers suggests that in the final quarter real wages grew about 0.4 percent."

So says...Mother Jones?!?

Other more mainstream sources said stuff like this: "But the real headline was November's rapid wage growth. Average hourly earnings were up 3.1 percent over the previous year, matching October's strong gain, which was the largest single-month rise since 2009. The November wage figure may signal that rising wages were not a momentary blip but a sustained trend as the labor market reaches full employment."

Anonymous said...

TCJA one year later: One broken promise after another

Broken promise No. 1: $4,000-$9,000 wage growth.
In the 11 months following the December 2017 signing of the TCJA, wage growth has grown $0.71 an hour. During the same 11 months in the year prior to the corporate tax cuts, wages grew at $0.59 an hour.

Broken promise No. 2: Nearly 1 million additional jobs.
Only 255,000 more jobs were created after the TCJA was passed compared to the same period before it was passed. Worse still, the nominal increase in job growth is already slowing to levels below those seen before passage of the TCJA. During the last three months, average job growth has sunk below 2017’s average job growth, not exactly the sustained job growth taxpayers were promised.

Promise No. 3: Sustained business investment tsunami.
The average rate of growth in equipment investment in the first three quarters after passage of the TCJA has been less than the rate of growth experienced prior to passage of the TJCA: 6 percent vs 9.5 percent. This investment figure is especially damning since the tax bill contained specific provisions promised to increase business investment, including immediate and 100-percent deductibility of equipment investment spending.

Where did the corporate tax cut saving go? Companies have been shoveling their mountainous tax savings into dividends and share buybacks. Goldman Sachs estimated that companies will spend $1 trillion on share repurchases in 2018. That would be nearly 50-percent more than in 2017.

Broken promise No. 4: Sustained 4-6-percent GDP growth
GDP growth reached 4.2 percent for a single quarter and is now declining. This should not be surprising. While share buybacks help stockholders, unlike business investment, they don’t directly increase GDP.

Broken promise No. 5: No increase in deficits
Not only has there been a massive increase, it is worse than originally estimated. According the Congressional Budget Office’s April update, the TCJA will increase the federal debt by nearly $1.9 trillion over the next 10 years. Not only is that a staggering number, it is $433 billion more than the December estimate provided by the Joint Committee on Taxation.

The 2018 federal deficit was $779 billion, up more than $100 billion from the 2017 deficit of $666 billion. Not coincidentally, 2018’s corporate tax revenue was nearly $100 billion less than 2017’s level.

Eric said...

That article by Chris Macke (the founder of Solutionomics!) was an object lesson in peevishness.
Sure there were a million new jobs but really a million new jobs. And GDP growth hit 4.2% but not really over 4% growth. And wage growth grew at a faster rate but not as much as we were promised - boo! Notably, he elides any mention of spending as a factor in increasing the deficit which is convenient since total revenues after the tax cut increased.

Anonymous said...

The guy who mainlines Watts Up With That "exposés" and Wall Street Journal editorials is concerned about peevish spin from Solutionomics?

The guy who wrote a million variations of "When can we expect that $2500 cost reduction from Obamacare? I was told repeatedly it was coming. Period." now awards Trump bonus points for intentions and “close enough”s? (Goodbye, "Period"; hello, semi-colon.)

Sure, you didn't really write that a million times. And really, one economic quarter is the same as all of them, if you believe hard enough. And really, the correct baseline is zero and every new job from now on counts as a Trump tax cut special.

Eric said...

The difference between Trump's braggadocio and Obama's serial lies about upending one-sixth of the U.S. economy are the difference between a horse placing and another getting shot in the stable before the race.

Anonymous said...

Placing an awful $2.3 trillion bet on a crippled nag called Trickle Down and his all-time winless record has already proven to be exactly what the detractors knew it was. That was like shooting everyone in the racetrack grandstand except the owners.

Calling it "Braggadocio" is a feeble excuse for a supposed fiscal conservative, but it would be a good name for a horse.

Eric said...

Wage growth for people who didn't finish high school grew faster than another other group in 2017 and 2018.

How much longer must we suffer through this hell of record-low unemployment?

Anonymous said...

So, all of your previous caterwauling about the destructive impact of mandatory minimum wage hikes in Seattle and elsewhere is now, as Ron Ziegler once said, 'inoperative'?

Score one for Trump!

Anonymous said...

Whenever someone talks about wage growth without talking about inflation, they're trying to sell you something.

Groceries... what a concept.

Eric said...

Well, there are varied opinions about the effect of raising the minimum wage. For example, this guy thinks this other guy is a moron and vice-versa.

Anonymous said...

Well, there are varied opinions about the effect of raising the minimum wage.

"Correct" and "wrong" are in fact varied opinions.