Please, please, pul-eze. Stop kicking the can down the road. Don’t make me live through hyperinflation on top of unending war, major recession, a pandemic that largely shut down the U. S. economy, and cities succumbing to anarchy and violence.
Spending by issuing yourself credit can go on until it can’t.
On the other hand; not extending support with 15% unemployment would be calamitous too.
Personally; I think Congress should continue to extend unemployment benefits; and targeted one-time support to state governments and business to adjust to the new world (e.g. buy plexiglass for the DMV to allow in-person interaction). Offset some of it with taxes — increase UI contributions by lifting the contribution ceiling.
Related, this week the EU agreed on a recovery spending package backed by common debt. Now all it needs is an independent taxing power and the EU is a full monetary and fiscal sovereign.
An alternative to the US dollar is closer than ever (increasing the risk of bad decisions…)
I expected that 30 years ago during the S&L crisis, when $500B was a lot of change. Now, like a lot of people, I’m complacent.
But no, I cannot imagine the political will rising to balance the budget let alone reduce the debt.
In, fact I fully expect stimulus 5&6 if no vaccine is found.
Roughly what is the sum of taxes paid into the system on a yearly bases these last 5 years? If this information is even close then why can’t we do the right thing and help people financially with U. S. Tax dollars? Fix the tax system, collect what should be collected and keep things fair and prevent things from becoming a real disaster? When most of us purchase a car we make payments to pay it off, same with a home and most major things in life. Keep things stable, we do have the power to do that!
I do not know how to link a site please bare with me..
https://www.nationalpriorities.org/budget-basics/federal-budget-101/revenues/
In 2015, total federal revenues in fiscal year 2015 are expected to be $3.18 trillion.2 These revenues come from three major sources:
Income taxes paid by individuals: $1.48 trillion, or 47% of all tax revenues.
Payroll taxes paid jointly by workers and employers: $1.07 trillion, 34% of all tax revenues.
Corporate income taxes paid by businesses: $341.7 billion, or 11% of all tax revenues.
There are also a handful of other types of taxes, like customs duties and excise taxes that make up much smaller portions of federal revenue. Customs duties are taxes on imports, paid by the importer, while excise taxes are taxes levied on specific goods, like gasoline. This pie chart below shows how much each of these revenue sources is expected to bring in during fiscal year 2015.
You left out nuclear war with China and Russia.
Giraldi, Orlov, and The Saker all think the US is in free fall, and its collapse will be much worse than the Soviet Union’s. Some even think that American troops overseas will stranded and abandoned, because there be no government capable of bringing them home. Somewhat extreme no doubt, but a disaster on the order of The Great Depression plus World War I and II may be looming.
We need to bring all the troops home to help police our burning cities.
Bob, I wonder how many people worry about it? Maybe more than you think. Don’t know your town, but Lincoln is prosperous and fairly quiet, yet when I shop the canned soup isle, I find it to be remarkably wiped out. Like people want food with a long shelf life in the house. Maybe it’s just an echo of the T.P. shortage, maybe not.
Meh. China’s dam will break and they will go under, in a couple of ways. In the global recession that follows Russia goes broke because their extraction economy fails in a global recession. We will do well by comparison.
Steve
GreyShambler, My small town of Mt. Vernon is doing OK. It isn’t prospering because while it used to be on the main route from Columbus to Cleveland, the Interstate bypassed it by 20 miles, and there is a slow deindustrialization going on. You can get most things in Kroger and WalMart, but there are curious missing items, mostly pasta, pickles, and paper on gain off again. Our county has have low COVID numbers and no deaths. There have been few permanent closings so far, but the Damoclean sword is swinging slowly.
Steve, You’ve got it backwards. China and Russia are in far better shape than we are. If anyone has an extractive economy, it is the US. Both China and Russia have industrial sectors that are far more diverse and extensive than ours, and China’s industrial sector if very much larger than what we have left. Our industrial sector was sold off to China. As to Russia, it runs trade surpluses even without oil and gas. It has very little government debt, no foreign debt, and runs government budget surpluses.
Neither country has a significant minority actively pursuing its overthrow.
This is a time I don’t mind the US government issuing credit. This is exactly the kind of moment when deficit spending is justified IMO. The problem is the deficit spending never goes away once the crisis is over and I see zero indication it will be any different after Covid.
But haven’t we set a precedent here? What shall a Governor do if the swine flu raises it’s ugly snout in 18 months? Shut down sporting events, bars and restaurants? What’s the bar? And how can it be measured in advance?
And if it does, and Governors go that route, more stimulus?
Andy:
As noted in the post, the only things that allow us continue to issue credit in this manner are a) that the U. S. is a monetary sovereign and b) confidence in the dollar. As the number of dollars in the hands of foreign governments increases, both of those factors are threatened. We cannot issue ourselves credit indefinitely untethered to the underlying economy without risk. Not even MMT-ers believe that.
Dave,
Oh, I agree 100% but I think the fundamental problem isn’t that we’re issuing ourselves credit to deal with Covid, it’s that we’re issuing ourselves credit to “pay” for government every single year which, as of 2019, amounted to 25% of total federal spending – 1.1 Trillion.
It goes back to the point you’ve made many times before that it’s crazy to borrow to pay for operating costs. Spending $3-6 trillion to respond to Covid, taken on its own, could arguably be justified and wouldn’t be fiscally worrisome absent the high level of normal-year deficit spending and the debt that practice has accrued.
I don’t think that’s the problem, either. I think the problem is that we spent too much on the ARRA without either paying it back or producing enough growth afterwards.
I’ve written a sort of follow-up post. Check out the graph in that post and you’ll see what I mean.