Tag: debt

King Biden & Queen Harris Overrule Supreme Court On Student Debt Forgiveness

Biden repeatedly acts like he is above the law. So who’s the threat to Democracy?

The Wall Street Journal reports Biden Snubs the Courts Again on Student Loan Forgiveness

‘That didn’t stop me,” President Biden declared after the Supreme Court blocked his $430 billion student loan write-off in 2023. It sure didn’t. After striking out in court with three debt forgiveness schemes, the Administration on Friday unveiled another. Take that, judges.

The Education Department says its proposed rule would authorize forgiveness for some eight million borrowers experiencing “hardship.” Under the rule, the department can discharge debt if it calculates a borrower has an 80% likelihood of defaulting on payments within the subsequent two years based on 17 factors such as income, debt balances and assets.

The rule would effectively let the department forgive debt of any borrower any time it wants. The administration says high child-care costs could qualify as a hardship. How about high auto loan or credit-card payments? Did someone say moral hazard?

In April the department released a plan that cancels accrued interest for 25 million borrowers and forgives debt of those who entered repayment over 20 years ago or who “enrolled in low-financial-value programs”—meaning, forprofit colleges. The plan also promised to waive debt for borrowers with a “hardship.”

A federal court last month blocked that plan, but the department says its new rule “would operate separately and distinctly.” Courts are playing whack-a-mole with the Administration’s debt write-offs that end-run Congress, which never authorized such broad-based debt forgiveness.

Such lawlessness is one reason so many Americans discount the left’s assertions that Donald Trump endangers democracy. Mr. Biden acts like he’s king, and Democrats and media voices cheering him on have no standing to object if Mr. Trump follows the Biden precedent.

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Thanks To The Cost Of Living Crisis, U.S. Household Debt Has Soared To The Highest Level Ever Recorded

Our entire economy is fueled by debt.  In fact, if going into more debt was suddenly banned the U.S. economy would instantly hit a brick wall.  For the vast majority of us, our lifestyles simply cannot be funded by what we actually make.  So we use debt to bridge the difference, and this has particularly been true during the cost of living crisis.  Total household debt has now reached a grand total of 17.8 trillion dollars, and we continue to pile up more with no end in sight…

A quarterly report published this month by the Federal Reserve Bank of New York on household credit and debt found that between the first quarter of 2021 and the second quarter of 2024, credit card debt surged 48.1% while household debt — which includes mortgages and auto loans — rose by 21.6%.

In dollar terms, credit card debt rose from $770 billion in early 2021 to $1.14 trillion in the most recent quarter, while household debt increased from $14.64 trillion to $17.8 trillion in the same period.

I did not realize that credit card debt had risen by more than 48 percent since the first quarter of 2021.

That is extremely alarming, because it indicates that millions upon millions of households are literally living on the edge of financial disaster.

And the fact that delinquency rates have been climbing just underscores how serious things have become…

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US National Debt Hits $35 Trillion Milestone

In a historic fiscal milestone for the federal government, the national debt rose to $35 trillion for the first time, according to the latest Treasury Department Debt to the Penny data.

Current debt levels are equal to $105,000 per person and $266,000 per U.S. household.

Washington accumulated another $1 trillion in debt in less than seven months. Over the past 12 months, the national debt has spiked by nearly $2.35 trillion, an average of about $6.4 billion per day.

House Budget Committee Chair Jodey Arrington (R-Texas) is calling the announcement “another dubious milestone in the fiscal decline of the most powerful and prosperous nation in its history.”

Since January 2021, the national debt has increased by about $7.3 trillion.

The immense growth of red ink flooding the nation’s capital has captured the attention of public policymakers.

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The National Debt Is Making Us Poorer

Many Americans are unhappy about years of higher-than-normal inflation that have sapped buying power and reduced standards of living.

Now, the Congressional Budget Office (CBO) demonstrates that a difficult culprit will make you feel poorer over the next few decades: The nearly $35 trillion (and growing) national debt.

At its current trajectory, the rising national debt—and the increasing burden of making interest payments on it—will reduce Americans’ future income growth by 12 percent over the next 30 years, the CBO projects in a new report. That means the average person will earn about $5,000 less annually than they would in a scenario where the debt was not growing.

“This is the result of crowding out, whereby a higher national debt reduces private investment and slows income growth,” explain the number crunchers at the Committee for a Responsible Federal Budget (CRFB), a nonprofit that advocates for reducing the federal deficit. “With additional debt, income growth would slow further.”

If the national debt grows faster than the CBO currently expects—something that could happen due to wars, pandemics, or simply because lawmakers in Washington can’t cure their addiction to borrowing—the average person could miss out on $14,000 annually in future income gains that won’t materialize, the CRFB predicts.

That crowding-out effect is a serious threat to future economic growth. There are a finite number of dollars in the economy in any given year, and each dollar that has to be taxed away to make an interest payment on the debt is a dollar that cannot be invested, spent, or paid to an employee.

The costs of rising debt can be a bit difficult to understand because we don’t see reductions in potential earnings as obviously as we see price increases at the grocery store. Still, the effect is pretty similar. Americans’ experience with inflation in recent years is helpful in understanding how the cost of the national debt depresses living standards.

In the CBO’s baseline model, average earnings are expected to climb from about $84,000 this year to $123,000 in 2054, 30 years from now. That sounds great, except for the fact that average earnings would have climbed to about $128,000 by 2054 in a scenario where the national debt was stable and not growing.

To someone living in 2054, that $5,000 won’t feel real because it never existed. But it would have existed, if not for the poor decisions by federal officials in the 2010s and 2020s.

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Tens of Millions of Americans Are “Trapped” in an Endless Cycle of Debt That Is Sucking the Life Out of Them Financially

Did you know that U.S. households are 17,690,000,000,000 dollars in debt?  Of course household debt is only one part of a much larger story.  The federal government is 34 trillion dollars in debt, state and local governments are absolutely drowning in debt and unfunded liabilities, and corporate debt is at an all-time high.

As a society, we are on the greatest debt binge in the history of the world, and it just gets worse every single year.  Previous generations handed us an economy that provided us with an incredibly high standard of living, but we always had to have more.  So we have been borrowing and spending with no end in sight, and now our day of reckoning is fast approaching.

According to the New York Fed, U.S. household debt surged to another record high during the first quarter of this year…

In the first three months of 2024, total household debt surged to a fresh record of $17.69 trillion, an increase of $184 billion, or 1.1% from the previous quarter. The increase mostly stemmed from a jump in mortgage balances, which rose $190 billion from the previous quarter to $12.44 trillion at the end of March.

If we could handle all that debt, there wouldn’t be much cause for alarm. Unfortunately, delinquency rates are rising.

In fact, the proportion of credit card balances in serious delinquency has risen to the highest level since 2012…

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The American Empire Is Crumbling Under Its Debt

The pivot from Republic to Empire circa 1949 remains evident even today – fully one-third of a century after the Cold War ended and the Soviet Empire was swept into the dustbin of history. As depicted in the chart below, the War Capital of the World still deploys 173,000 troops in 159 countries and maintains upwards of 750 bases in 80 countries.

Indeed, in some sense it’s as if WWII never ended. As of 2020, Washington still had large military forces in places where they had arrived 75 years ago during the final span of WWII:

  • 119 bases and nearly 34,000 troops in Germany.
  • 44 bases and 12,250 troops in Italy.
  • 25 bases and 9,275 troops in the UK.
  • 120 bases and 53,700 troops in Japan.
  • 73 bases and 26,400 troops in South Korea

As we indicated in Part 2, the traditional post-war demobilization after 1945 would have wiped clean the above slate of Empire. But it was reversed in 1948-1949 when the Soviet Union got the A-bomb and Mao won the civil war in China. Thereafter, the spread of bases, troops, alliances, interventions and Forever Wars proceeded relentlessly on the grounds that the rickety communist states domiciled in Moscow and Beijing posed an existential threat to America’s survival.

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The White House Claims Borrowing $16 Trillion Over the Next Decade Is Fiscally Responsible

The budget plan President Joe Biden unveiled on Monday would hike taxes, increase federal spending to unprecedented levels, and lock in budget deficits that average nearly $2 trillion annually for the next decade.

But possibly the craziest detail is the fact that the White House is trying to frame all of that as being an exercise in fiscal restraint.

No, really. In a “fact sheet” released alongside the budget, the White House touted how the proposal would cut the deficit by $3 trillion over the next 10 years. “Strong and shared growth that benefits all Americans isn’t just good for working families and the economy; it will also lead to better fiscal outcomes,” the administration claims, adding that Biden believes “long-term investments in our nation and its people should be paid for.”

Someone in the White House might want to Google what the phrase “paid for” actually means, because Biden’s budget assumes the federal government will keep borrowing at near-record levels for the next decade.

For fiscal year 2025, which begins on October 1 of this year, Biden is asking Congress to spend $7.3 trillion while the federal government will collect just $5.5 trillion in taxes. That will necessitate borrowing $1.8 trillion to make ends meet. Over the 10-year window covered by the president’s budget plan, federal revenues would exceed $70 trillion, but Biden is proposing to spend $86.6 trillion.

This is what “paid for” looks like, apparently.

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The U.S. national debt is rising by $1 trillion about every 100 days

The debt load of the U.S. is growing at a quicker clip in recent months, increasing about $1 trillion nearly every 100 days.

The nation’s debt permanently crossed over to $34 trillion on Jan. 4, after briefly crossing the mark on Dec. 29, according to data from the U.S. Department of the Treasury. It reached $33 trillion on Sept. 15, 2023, and $32 trillion on June 15, 2023, hitting this accelerated pace. Before that, the $1 trillion move higher from $31 trillion took about eight months.

U.S. debt, which is the amount of money the federal government borrows to cover operating expenses, now stands at nearly $34.4 billion, as of Wednesday. Bank of America investment strategist Michael Hartnett believes the 100-day pattern will remain intact with the move from $34 trillion to $35 trillion.

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How the Federal Budget Deficit Doubled in a Single Year

It’s not totally unprecedented to see the federal budget deficit double from one year to the next, as it seems to have done this year.

But those occasions, at least in the past 50 years, have always corresponded with bad stuff happening to the national economy. Deficits surged in the late 1970s and early 1980s thanks to high inflation and a series of recessions. The budget deficit doubled between 2002 and 2003 thanks to a recession and as the War on Terror kicked off. And it skyrocketed again during the crises that bookended the 2010s: the mortgage crisis and the COVID-19 pandemic.

This year will likely be added to that list. The Congressional Budget Office last week projected that the federal government will post a deficit of $2 trillion when the current fiscal year ends on September 30.

At first blush, that might not appear to double last year’s budget deficit of about $1.4 trillion, but keep in mind that last year’s total included roughly $400 billion for President Joe Biden’s student loan forgiveness plan—funds that were never spent because the Supreme Court struck down the proposal, as the CBO notes.

Compared to those other historical examples, however, this year seems like an outlier. Unemployment is low, the economy has been growing steadily, and inflation has significantly abated. America does not seem to be in a crisis at the moment, but the government’s balance sheet certainly is.

And it is that way, in large part, because of the government’s own programs—as opposed to, say, an external event like a pandemic or a mortgage crisis. The drivers of this year’s rising deficit are four-fold, and three of them are the result of decades of poor policymaking: rising interest costs on the $33 trillion national debt, higher Social Security outlays, and more Medicare spending. As Axios points out, those three categories added more than $390 billion to the deficit relative to last year—a tremendous jump in a single year.

The fourth category is falling federal income tax revenue, which is responsible for about $171 billion of the added deficit this year versus last. That’s likely a blip and not a long-term problem—federal tax revenue was unexpectedly high a year ago, and bigger swings in annual revenue tallies seem to be becoming more common, as The Wall Street Journal explained in May.

That’s not the case for the other three categories driving this year’s deficit, all of which are going to keep getting worse for the foreseeable future.

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Surprised? Debt Ceiling Deal Puts No Limits on Ukraine Aid

The debt ceiling agreement reached between the White House and House Republicans places no constraints on spending on the war in Ukraine, a White House official told Bloomberg.

The $113 billion that has been authorized to spend on the war in Ukraine so far was passed as supplemental emergency funds, which is exempt from the spending caps that are part of the debt ceiling deal.

According to the Congressional Budget Office, funding “designated as an emergency requirement or for overseas contingency operations would not be constrained, and certain other funding would not be subject to the caps.” The deal suspends the nation’s debt limit through January 1, 2025.

Hawks in Congress are looking to use emergency spending to increase the $886 billion military budget that was agreed to as part of the deal. The emergency funds could go beyond Ukraine and might be used to send weapons to Taiwan or for other spending that hawks favor as part of their strategy against China.

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