Coming Soon: The Mother Of All Debt Ceiling Crises

 

[Urgent Note: The nation’s future and a massive debt ceiling hangs in the balance as Trump pushes beyond the Comey hearings. That’s why I’m on a mission to send my new book TRUMPED! A Nation on the Brink of Ruin… and How to Bring It Back to every American who responds, absolutely free. Click here for more details.]

While the Imperial City is frozen in the Second Coming of Comey, it doesn’t mean that the Washington spending machine is on pause. In fact, the Treasury’s cash balance yesterday stood at only $153 billion — down by $130 billion just since the tax season peak was reached on April 25th.

Uncle Sam has been burning cash at a rate of $3.2 billion per calendar day since then and has no more room to borrow. That’s because the public debt ceiling is frozen at its March 15th level ($19.808 trillion) and the mavens at the Treasury Building have run out of borrowing gimmicks.

The countdown to the mother of all debt ceiling crises is now well underway — with the nation’s net debt sitting at $19.69 trillion. That figure, in turn, is up nearly $500 billion since FY 2016 ended on September 30 with the net debt at $19.22 trillion.

U.S. States Aren’t Prepared for the Next Fiscal Shock

U.S. states, still grappling with the lingering effects of the longest recession since the 1930s, are even more vulnerable to another fiscal shock.

The governments have a little more than half the reserves they’d stashed away before the 18-month recession that ended in June 2009, according to a report last month by Pew Charitable Trusts. New Jersey, Pennsylvania, Illinois and Arkansas have saved the least.

It’s Hard to Watch Your Country Die

An older article from 2011 that couldn’t be more relevant today.

 

The talk in global political circles is that the U.S. is washed up. America’s defense secretary, traveling to China in January, addressed the gossip. “I’ve watched this sort of cyclical view of American decline come around two or three times, perhaps most dramatically in the latter half of the 1970s,” Robert Gates said. “And my general line for those both at home and around the world who think the U.S. is in decline is that history’s dustbins are filled with countries that underestimated the resilience of the United States.”

Maybe. But it seems hard to underestimate the U.S. these days.

The secretary’s words ring especially hollow when you look at where he was heading. China has plenty cause for a low estimation of the United States. America owes it probably a trillion dollars. And China looks poised to single-handedly neutralize America’s robust, decades-long influence in the Asia Pacific thanks to a military spending binge that will yield aircraft carriers, stealth planes and aircraft-carrier-killing missiles.

Uncle Sam’s $8 Trillion Annual Debt Churn: Why Washington Is Pertrified Of Honest Interest Rates

I know that headline sounds completely outrageous.  But it is actually true.  The U.S. government is borrowing about 8 trillion dollars a year, and you are about to see the hard numbers that prove this.  When discussing the national debt, most people tend to only focus on the amount that it increases each 12 months.  And as I wrote about recently, the U.S. national debt has increased by more than a trillion dollars in fiscal year 2014.

But that does not count the huge amounts of U.S. Treasury securities that the federal government must redeem each year.  When these debt instruments hit their maturity date, the U.S. government must pay them off.  This is done by borrowing more money to pay off the previous debts.  In fiscal year 2013, redemptions of U.S. Treasury securities totaled $7,546,726,000,000 and new debt totaling $8,323,949,000,000 was issued.  The final numbers for fiscal year 2014 are likely to be significantly higher than that.

So why does so much government debt come due each year?

High Debt, Low Integrity

The government shutdown is over. It is back to business as usual – that is, the usual business of out-of-control government spending. As of this writing, the U.S. national debt is over $17 trillion which amounts to $53,764 per citizen, $148,756 per taxpayer (according to USDebtClock.org). The six largest federal budget items are, in order: (1) Medicare/Medicaid ($860 billion); (2) Social Security ($812 billion); (3) Defense/Wars ($607 billion); (4) income security ($349 billion); (5) net interest on the debt ($261 billion); and (6) federal pensions ($229 billion). These sums are astronomical, and signal financial crisis or national degeneracy or both.