Mother Of All Debt Ceiling Crises Looms
TheDailyReckoning, June 13, 2017
Uncle Sam has been burning cash at a rate of $3.2 billion per calendar day 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 US Treasury has 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.
We itemize this torrent of red ink to document a practical point. It will be impossible to pay Uncle Sam’s bills in full after Labor Day (September) unless the debt ceiling is raised well the $20 trillion mark.
Exactly 36 years ago, Washington stood on another symbolic threshold — that is, raising the debt ceiling over the $1 trillion mark for the first time. Even at $1 trillion, the public debt amounted to just 30%of GDP — a far cry from the 106% ratio presently.
Treasury tax collections have slowed to a crawl. Overall collections are barely even with prior year and says nothing to the big increases for defense, law enforcement, border control and infrastructure being sought by the Trump White House.
The moving average of withholding collections — about as accurate a real time measure of the US economy as exists — is running below the average wage rate gain of about 2.6% per annum. That means real wage growth is turning negative — not accelerating like the narrative being peddled by Wall Street.
The Donald’s odds of leading Washington over the $20 trillion threshold are very low. Trump’s approval ratings will soon dip into the low 30s as the RussiaGate prosecution gathers full force.
The Democrats are not about to bail-out the Donald when they believe they have him on the ropes. At the same time, there is no GOP majority for any meaningful deficit reduction plan that could be attached to a debt ceiling increase bill as a legislative quid pro quo.
This is not a Trump Fiscal Stimulus, but a Fiscal Bloodbath and this time there will be absolute legislative paralysis. Washington is heading for the unthinkable. That is, the need for the US Treasury to prioritize and allocate spending based on the available inflow of revenues.
That will come as a giant shock to those who fail to understand that Washington will soon be ungovernable. What comes next is a debt ceiling Fiscal Bloodbath that will remove all doubt.
Здешние политиканы, «эксперты», подконтрольные ЦРУ СМИ продолжают нахваливать псевдодемократическую Америку.
Те, кто любит «наших американских партнеров», «забывают» о грязных, злых уродах США.
О таких монстрах, как коварный и крайне опасный мошенник, расист, лжец, и убийца Дональд Трамп. И о таких, как порочный Конгресс США, фашистские ФБР и ЦРУ, лживые американские СМИ…
Арнольд Локшин, политэмигрант из США