The abrupt good news of a reduction in indebtedness,
just does not negate the harsh reality that the yearly national deficit keeps growing at rates that defy any reasonable way
to reverse. It must be stipulated that the Trump administration has placed a low emphasis on tackling the debt juggernaut.
With the immediate prospects that the
Federal Reserve will embark on a sustained interest rate increase, the task of dampening down future obligations looks remote.
The case for stating the risks is energetically made by David Stockman, former Director of the Office of Management and Budget
under President Ronald Reagan. Note that his consistent anti-establishment voice, who has enraged the antagonism of the Beltway
culture, is dismissed as a mere alarmist. However, if you take the time to read his arguments, it is very difficult not to
this analysis of Stockman: "After March 15 Everything Will Grind To A Halt" sets the stage as the deadline to increase the borrowing limit approaches.
"Trump is inheriting a built-in deficit of $10 trillion over the next decade
under current policies that are built in. Yet, he wants more defense spending, not less. He wants drastic sweeping
tax cuts for corporations and individuals. He wants to spend more money on border security and law enforcement.
He’s going to do more for the veterans. He wants this big trillion dollar infrastructure program. You put
all that together and it’s madness. It doesn’t even begin to add up, and it won’t happen when you
are struggling with the $10 trillion of debt that’s coming down the pike and the $20 trillion that’s already on
Add into the equation
the even more problematic condition that reasons, Stockman: Trump's in a Giant Debt Trap.
need a budget resolution for the next fiscal year. They have to have a debt ceiling increase before then. It is a chicken
and egg conundrum. The debt ceiling freeze is in and right now it is on holiday. On March 15 it will freeze in. There will
be $200 billion on the balance sheet which will dissipate by the day with no borrowing authority. Then where do they get a
majority? The Freedom Caucus, Tea Party Republicans are not going to vote for a multi-trillion debt ceiling increase before
they repeal Obamacare. The Democrats are not going to help Trump as long as he is slamming their constituencies and putting
up walls at the border.”
“The market is totally missing the fact that the tax cut isn’t going to happen. That instead there is
going to be this terrible showdown on the debt ceiling. This will create a panic and sell-off like we haven’t seen before.
Yesterday was “Tulip Time” and irrational exuberance on steroids. Once it becomes clear that a clock is ticking
it will become a massive time to sell.”
a conclusion would instill panic into the system, if Stockman is correct. Yet, most will simply ignore the warning of this
day of reckoning and assume that business as usual will emerge. The public debt jumps from about $19 trillion + this year
to over $29 trillion in 10 years by 2026, according to appropriate budgetary levels for fiscal years 2018 through 2026. Will the Freedom Caucus faction of the GOP capitulate to the pressures of avoiding default? Or will the bitter feud over
the repeal and replacement of Obamacare leave an anger that destroys any disposition to up the ceiling? Surely, Democrats
in Congress may see this crisis as an opportunity to let the U.S. go into technical default.
So much for the prospects, Trump Promised to Eliminate National Debt in Eight Years. Good Luck With That. "Donald Trump told the Washington Post he would get rid of the national debt “over a period of eight years.”
It may have been the boldest promise he’s ever made, considering the U.S. hasn’t been debt-free since 1835."
The careerist politicians are far less fearful of
defaulting on the official debt ceiling, because the off budget and total unfunded obligations is so enormous that the entire international monetary system would have to be re-invented to rescue world commerce. For the
end reality is that the current debt cannot and will never be paid and the principle retired.
Just maybe this March 15, 2017 deadline might become the impetus to end the charade
of maintaining a debt ceiling at all and eliminate the pretense of fiscal responsibility. If the Treasury was serious about
creating financial breathing room to the burden of unsustainable current interest payments, the short term national
debt should be substituted for 30 or even 50 year bond obligations while interest rates are so low. However, this strategy
was never used, because the moneychangers have no intention of even providing a temporary relief to the taxpayer.
While a Trump tax cut, both corporate and personal
will certainly drive economic growth, the absence of any discussion, much less a commitment to cut spending guarantees
the sink hole of financial oblivion will only intensify.
An example that illustrates this certainty Once Again, Raising the Debt Limit Emerging as a Flash Point, comes from one of the usual and familiar suspects.
"In a meeting with reporters Thursday, House Democratic Whip Steny H. Hoyer said Democrats would be “inclined” to vote for a debt limit increase as long as the bill is clean, meaning it
would raise the debt limit without any conditions. But the Maryland lawmaker added that if conservatives insist on a trade-off
for raising the borrowing ceiling, “that’s a different question.”
Partisan brinksmanship is the order of the day in this dysfunctional and surreal
club for power elites. Any sincere patriot is soon confronted with compromise or outright sell out of principle in order to
maintain their seat in Congress. As long as debt created money is issued by the private Federal Reserve, there can be no way
out of this dilemma.
Robert Romano offers up this cheerful thought:
" After 20 years of excessive borrowing — all but guaranteed as Baby Boomers fully receive
their Social Security, Medicare and Medicaid benefits — the national debt would be $93 trillion.
And if the economy continues at its current anemic
rate, the GDP would only be $40 trillion — a debt to GDP ratio of 232 percent.
If that happens, Trump will almost have certainly failed
to get the U.S. economy moving again. In a very short span of time, the U.S. could be left with a debt that can never possibly
If this is the fate that
befalls us, eliminating the debt limit ceiling becomes immaterial. Trump may well have to resort to directly issuing Treasury
bonds and by pass the Federal Reserve note legal tender laws. In any event, the looming Ides of March, day of reckoning may
well be the death nil for the American Caesar Imperial Empire.
SARTRE - March 14, 2017