We Are Even More Financially Screwed than I Thought

New data from December on federal spending and revenue make the federal fiscal picture look even more disastrous than I previously believed it was.  The epidemic is over, the economy is supposedly in fine shape, but somehow the federal deficit doubled from 2022 to 2023, to over $2 trillion.  But the real problem is that although the economy is supposedly great, tax collections have dropped.  In December the feds spent $559 billion and collected only $449 billion.  Although the economy is reported to be growing, tax receipts were lower than in December 2022 and even further lower than those in December 2021.  Not a good trend.  In fact, during most of 2023, tax receipts have declined, making the GDP numbers seem suspiciously high.

We are actually in the first quarter of fiscal 2024, October through December 2023, and the deficit is at a record level other than the first CV-19 year, and is far about original estimates, $130 billion compared to an $88 billion projection.  The Bidementia administration is clueless about either the depth of the problem or how to address it.  All it can offer is lies and false reassurances about how great the economy is.  Biden and the Dems in fact have no inclination to do anything but keep spending and try to raise taxes, which will only lessen economic activity and increase the deficit. In fact they keep spending because that is the only way they can make the economy look like it might be okay.

If Trump wins, he shows no spending restraint either.  Someone has to get some balls and dramatically cut spending, starting by reversing all the green bullshit and all  the garbage welfare giveaways to buy votes.  This level of deficit pressures the Treasury to have to sell massive amounts of debt, at higher interest rates.  The Federal Reserve can do nothing about this; it has lost control of interest rates–supply and demand factors will control those now and it isn’t pretty.  The higher interest rates add even more to the deficit.

I don’t know it will take for the public to wake up and understand how bad the situation is and accept that spending has to be cut and we at a minimum have to get to a balanced budget and stop adding to debt.  Raise the eligibility age for Social Security and Medicare.  Make those wealthy enough to do so fully pay for their Medicare and cut their Social Security.  Make people work to get Medicaid.  Routinely and regularly force people to prove that the actually are really disabled to get Social Security disability and Medicare or Medicaid.  We can’t afford the kind of slackery that routinely occurs.  People need to get a whole lot more responsible and work a lot harder.

Cut federal employment in half, reduce the absurd pension and health benefits that federal employees get.  Remove permitting and other red tape processes that limit economic activity.  Do a one-time tax on private foundations, at least a 50% one for all the taxes that rich people have dodged with this phony tax ploy, and devote the proceeds to debt retirement.  I am sure there are a lot of other things that can be done, and soon or later we will be forced to do them, so might as well get on with it.   (Treasury Data) (ZH Post)