[jje1000]

The Federal Deficit Is Even Bigger Than It Looks

Student-debt cancellation complicates the numbers as higher interest rates make borrowing costlier.

www.wsj.com

America is now paying more in interest on its record $33 trillion debt than on national defense — here's who holds the IOUs​

In the current fiscal year through August, the Treasury has shelled out $807.84 billion in interest on its debt securities, while the Department of Defense’s budget for military programs totaled just $695.44 billion in the same period.

This is particularly alarming when you consider how much of the federal budget goes into defense, with the U.S. outspending every other country.

Ultimately, rising interest rates will only exacerbate the national debt, making it harder for the government to respond to a slowing economy.

“As we have seen with recent growth in inflation and interest rates, the cost of debt can mount suddenly and rapidly,” Michael A. Peterson, CEO of the Peter G. Peterson Foundation, said in a statement.

“With more than $10 trillion of interest costs over the next decade, this compounding fiscal cycle will only continue to do damage to our kids and grandkids.”

America is now paying more in gross interest on its record $33 trillion debt than on national defense — here's who holds the IOUs?

The Treasury spent nearly $89 billion in interest on debt securities in October.

finance.yahoo.com

Interesting comment:

Can our nation afford higher interest rates with the current national debt?

If there is any time for bipartisan cooperation, that time is now.

thehill.com

 

[afransen]

I don't really agree with this take. The Fed is just trying to not overshoot. Policy is very tight.

 

[Northern Light]

View attachment 514641

I don't really agree with this take. The Fed is just trying to not overshoot. Policy is very tight.

While I concur; I think it is important to say the U.S. is somewhere between 110-130% debt to GDP depending on which source and date you take, generally about 20 points higher than Canada (includes provincial numbers); and really only Japan and Italy, Portugal and Greece are in similar spaces among developed nations.

I think its important not to draw imaginary lines in the sand; at the same time, this is a very consequential level of debt and its growing.

 

[afransen]

While I concur; I think it is important to say the U.S. is somewhere between 110-130% debt to GDP depending on which source and date you take, generally about 20 points higher than Canada (includes provincial numbers); and really only Japan and Italy, Portugal and Greece are in similar spaces among developed nations.

I think its important not to draw imaginary lines in the sand; at the same time, this is a very consequential level of debt and its growing.

For the Fed's mandate, higher government borrowing costs are a feature, not a bug. It tends to worsen deficits, constraining inclination to increase spending while simultaneously crowding out private borrowing and investment, all of which serves to slow spending and reduce inflation.

 

[Northern Light]

Well..........the U.S. House has a speaker again..........but.......

Its Mike Johnson. (yeah, I had to look him up too)

CBC's story is here:

https://www.cbc.ca/news/world/us-speaker-vote-johnson-1.7007651

From the CBC story:

Sigh.....

 

[Richard White]

Well..........the U.S. House has a speaker again..........but.......

Its Mike Johnson. (yeah, I had to look him up too)

CBC's story is here:

https://www.cbc.ca/news/world/us-speaker-vote-johnson-1.7007651

From the CBC story:


View attachment 515590

Sigh.....

This may work in the Democrats favor during the elections

 

[Northern Light]

This may work in the Democrats favor during the elections

We've already had the mid-terms.

As such, I assume you mean the next General Election, which is in 13 months time.

 

[Richard White]

We've already had the mid-terms.

As such, I assume you mean the next General Election, which is in 13 months time.

Yes I did which is why I edited my post.

I forgot when the last general election was.

 

[Jonny5]

Portugal and Greece are in similar spaces among developed nations.

A key difference is the EU nations are now running very small deficits. Indeed, much of the EU outside of Italy is operating now at or around the break even point, so they are adding very little new debt.

The IMF expects combined deficits of eurozone governments will fall to 3.4% of GDP this year, and further to 2.7% in 2024.
Those countries that were in crisis a decade ago are expected to have much smaller budget gaps.
In Greece, the deficit is forecast to fall to 1.6% of GDP from 2.3% last year, while Portugal’s is expected to fall to 0.2% of GDP from 0.4%. Ireland is forecast to have a budget surplus for the second straight year.

Source: https://www.wsj.com/economy/global/as-u-s-debt-surges-europe-brings-its-own-under-control-2ea6e58b

 

[Northern Light]

A key difference is the EU nations are now running very small deficits. Indeed, much of the EU outside of Italy is operating now at or around the break even point, so they are adding very little new debt.


Source: https://www.wsj.com/economy/global/as-u-s-debt-surges-europe-brings-its-own-under-control-2ea6e58b

As a general rule one wants to see deficits at under 3% and broadly equal to or less than economic growth.

Canada ran something like 3.6% last year, I believe.

The U.S. is averaging close to 6%

 

[afransen]

Well..........the U.S. House has a speaker again..........but.......

Its Mike Johnson. (yeah, I had to look him up too)

CBC's story is here:

https://www.cbc.ca/news/world/us-speaker-vote-johnson-1.7007651

From the CBC story:


View attachment 515590

Sigh.....

Well, regardless of what happens with the presidency next year, the GOP will lose the House.

 

[afransen]

As a general rule one wants to see deficits at under 3% and broadly equal to or less than economic growth.

Canada ran something like 3.6% last year, I believe.

The U.S. is averaging close to 6%

Over the long run it should average a growth rate similar to nominal GDP growth. When the economy is performing well, the debt should be growing much less quickly (if not shrinking) as downside economic shocks lead to big step increases in debt through fiscal stabilizers and stimulus spending.

Canada's debt to GDP has been rising since the 2008 recession, through the fiscal imprudence of Harper and Trudeau and dramatically the step-impact of COVID. At least it has been falling at a rapid clip the past couple of years (~5% of GDP reduction per year) the past two years as inflation has deflated the debt away.

Canada Government Gross Debt to GDP

Canada recorded a Government Debt to GDP of 107 percent of the country's Gross Domestic Product in 2022. This page provides - Canada Government Debt To GDP - actual values, historical data, forecast, chart, statistics, economic calendar and news.

tradingeconomics.com

 

[Admiral Beez]

Well, regardless of what happens with the presidency next year, the GOP will lose the House.

But they may well win the White House.

Trump Leads in 5 Critical States as Voters Blast Biden, Times/Siena Poll Finds

Voters in battleground states said they trusted Donald J. Trump over President Biden on the economy, foreign policy and immigration, as Mr. Biden’s multiracial base shows signs of fraying.

www.nytimes.com

I was listening to the NYT podcast this morning. It looks like African Americans, especially males are leaning towards Trump or just abstaining.

Are Black Voters Leaving Democrats Behind?

Polls suggest they might be. So we convened a very special Thanksgiving focus group to try and understand why.

www.nytimes.com

 

[Richard White]

But they may well win the White House.

Trump Leads in 5 Critical States as Voters Blast Biden, Times/Siena Poll Finds

Voters in battleground states said they trusted Donald J. Trump over President Biden on the economy, foreign policy and immigration, as Mr. Biden’s multiracial base shows signs of fraying.

www.nytimes.com

I was listening to the NYT podcast this morning. It looks like African Americans, especially males are leaning towards Trump or just abstaining.

Are Black Voters Leaving Democrats Behind?

Polls suggest they might be. So we convened a very special Thanksgiving focus group to try and understand why.

www.nytimes.com

That's the great thing about the US.

You can win the presidency but not have any major power in any of the 2 chambers. If the Democrats win the house and/or senate they can effectively neuter the president.

 

[Admiral Beez]

That's the great thing about the US.

You can win the presidency but not have any major power in any of the 2 chambers. If the Democrats win the house and/or senate they can effectively neuter the president.

from Jan, 2009, until January 3, 2011, Obama had both chambers of Congress, and still accomplished little. Yes, Obamacare passed, which is something, but did the Democrats eliminate the filibuster or debt ceiling, or renew the assault weapons ban, or reform the welfare or tax system to reduce income disparity? Nope.