Living On Borrowed Time
Practically the entirety of Congress now believes that the ability to pay should not limit the ability to promise people whatever they want. There’s no poll of members of Congress to support this assertion. We base it on what they’ve communicated by real, material actions.
Remember, per the Constitution, Congress – and in particular, the House of Representatives – is vested with the “power of the purse.” They retain the authority to tax and spend public money for the federal government. Over the last 50 years Congress has demonstrated they give less than half a rip about the government’s ability to pay.
Congress may be good at taxing. But they’re even better at spending. According to the Treasury Department, the annual budget deficit, the shortfall between tax receipts and spending, for the 2019 calendar year topped $1.02 trillion. But that’s nothing…
The budget deficit for the first three months of the 2020 fiscal year, which started in October, is up 12 percent over this time last year. Specifically, the deficit for the first three months of the 2020 fiscal year is $357 billion. At this rate, the annual 2020 fiscal year deficit will eclipse $1.4 trillion.
The deficit, of course, is funded with Treasury debt. And since mid-October, nearly half the Treasury debt has been purchased by the Federal Reserve. If you recall, starting in mid-October, the Fed began conjuring money out of thin air at a rate of $60 billion a month for the sole purpose of buying Treasuries.