Tag: debt

Waste Of The Day: Puerto Rico, Guam, Others In Debt

Topline: The five inhabited U.S. territories are collectively $57.8 billion in debt and have issues with their financial statements that “can lead to poor financial decisions and lost access to capital markets,” according to a new report from the Government Accountability Office.

Key facts: The GAO suggested that the territories may struggle to repay their debt even more than the 50 U.S. states. The territories have high energy and import costs, extreme weather, economies that rely on just a few industries, and had a population decrease from 2010 to 2020.

Puerto Rico holds the most debt by far with $52.8 billion as of 2022, which is 47% of its gross domestic product. Guam ($2.5 billion of debt as of 2023), the Virgin Islands ($2.2 billion as of 2021), the Northern Mariana Islands ($121 million as of 2021) and American Samoa ($145 million as of 2023) are also struggling to balance their budgets.

If some of those statistics seem outdated, it’s because they are. The territories are supposed to release financial statements nine months after each fiscal year ends, but American Samoa is the only one meeting that deadline.

While Guam includes 2023 figures, it issued them seven months late.

The delays could hurt the territories’ credit rating, making future borrowing more expensive, according to the GAO. The territories also can’t be audited if they don’t have financial statements, which the GAO says will make it more difficult to identify potential fraud.

American Samoa is also the only territory properly managing its federal funds. The other four territories all had “questioned costs” in the most recent audits of their financial statements, which could mean “there was a violation or possible violation of a statute, regulation, or the terms and conditions of a federal award.” 

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France’s Fiscal Reckoning: Is The Eurozone’s Second Giant Next In Line?

France is caught in a debt spiral. Now the president of the French Court of Auditors is warning of the consequences of political inaction.

Pierre Moscovici has served as president of the French Court of Auditors for five years, overseeing regular audits of the nation’s public finances. From 2012 to 2014, he was France’s finance minister and then spent five years as EU Commissioner for Economic and Financial Affairs, Taxation and Customs. The man knows his way around empty coffers.

On Wednesday, Moscovici called on Prime Minister François Bayrou to take urgent steps to consolidate public finances. France’s budgetary situation, he said, has spun out of control, especially in 2023 and 2024. If a turnaround is not achieved soon, the capital markets will force one. “We can still act voluntarily,” he warned the government, “but tomorrow, the markets may impose austerity.”

For Now, Calm in the Bond Markets

Once the dominoes start falling, it goes fast. Investors dump French government bonds en masse. Yields spike, prices plummet, and refinancing the country’s massive debt becomes even more costly. Already, interest payments consume 10.6% of France’s state budget—roughly the same as education spending. As debt levels rise, fiscal maneuvering space shrinks.

With sovereign debt at 114% of GDP, the trap could snap shut unexpectedly. For now, European officials still point fingers at the U.S., whose debt ratios are similar. But no one can say how long that deflection tactic will work. Credit risk materializes suddenly—usually without warning.

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Americans Carry Median Non-Mortgage Debt of Nearly $19,000: Report

Americans in 100 of the largest metropolitan areas now have a median non-mortgage debt of $18,762 across four generations—baby boomers, Gen X, millennials, and Gen Z—which is down by 23.9 percent compared with $24,668 in 2024, financial services company LendingTree said in a June 24 report.

Non-mortgage debt includes personal loans, auto loans, credit card debt, student loans, and other debt.

Gen Xers, aged 45 to 60 years, have the highest median debt, at $26,207.

This was followed by millennials (aged 29 to 44 years), with a debt of $24,810; Gen Zers (aged 18 to 28), with $12,715; and finally baby boomers (aged 61 to 79), with $10,272.

The median debt fell in all four generations, with baby boomers seeing the largest decline at 45.3 percent. For the remaining three generations, debt fell by about 18 percent to 23 percent.

Matt Schulz, chief consumer finance analyst at LendingTree, called the decline in debt across generations a significant decrease.

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Belated Republican Objections to the One Big Beautiful Bill Glide Over Its Blatant Fiscal Irresponsibility

The One Big Beautiful Bill Act, which the House of Representatives narrowly approved early in the morning on Thursday, May 22, lives up to its name in at least one respect: It is big, weighing in at 1,037 pages and nearly 200,000 words. Since the bill’s final text was not available until 10:40 p.m. on Wednesday, about eight hours before it passed by a single-vote margin shortly before 7 a.m. the next day, it would not be surprising if bleary-eyed legislators overlooked some of its nuances in their hurry to deliver the package that President Donald Trump demanded. As Reason‘s Liz Wolfe notes, at least two Republicans—Reps. Mike Flood (R–Neb.) and Marjorie Taylor Greene (R–Ga.)—have publicly admitted as much, saying they missed objectionable parts of the bill when they voted for it.

If Flood and Greene had voted no, it would have been enough to change the outcome. Furthermore, it seems safe to assume that at least some of their colleagues had similar regrets but are too embarrassed to admit that they failed to exercise the minimum diligence that should be expected from members of Congress. But the complaints from Flood and Greene are notable for another reason: They have nothing to do with the bill’s blatant fiscal irresponsibility, the main flaw highlighted by critics such as Rep. Thomas Massie (R–Ky.), Sen. Rand Paul (R–Ky.), and Elon Musk, who on Tuesday condemned “this massive, outrageous, pork-filled Congressional spending bill” as “a disgusting abomination.”

That much was clear prior to the House vote. As Reason‘s Eric Boehm noted the day before Flood and Greene gave their crucial assent to the bill, the Congressional Budget Office (CBO) projected that it would add $2.3 trillion to the national debt over 10 years—an estimate that the CBO upped to $2.4 trillion this week. Boehm added that “other assessments of the bill” by the Yale Budget Lab (originally published on May 16) and the Penn Wharton Budget Project (published three days later) estimated that it would add “more than $3 trillion” to the debt.

Those are low-ball estimates, based on the unrealistic assumption that Congress will allow Trump-favored tax cuts to lapse toward the end of that period. If “temporary provisions in the bill are made permanent,” Boehm reported, the Yale Budget Lab estimated that it would trigger $5 trillion in new borrowing.

The national debt currently exceeds $35 trillion, including about $29 trillion in debt held by the public, which is about the size of the entire U.S. economy. In January, the CBO projected that publicly held debt would hit 119 percent of GDP by 2035. Two months later, Trump promised to do something about that. “In the near future,” he told Congress, “I want to do what has not been done in 24 years—balance the federal budget. We’re gonna balance it.” But the glaring gap between that promise and the One Big Beautiful Bill Act did not faze Flood or Greene, whose concerns are much narrower.

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After Backlash, White House Prepares Rescissions Bill To Codify Some DOGE Cuts

The big question in recent weeks: Why are House Republicans hesitating to codify the waste and fraud identified by Elon Musk’s Department of Government Efficiency (DOGE) into law?

Musk’s CBS News interview on Tuesday, where he called the “Big, Beautiful Bill” (BBB) a “disappointment,” appears to have kicked off a broader information campaign aimed at pressuring the White House to push House Republicans toward formally codifying some DOGE-related spending cuts.

By Wednesday afternoon, Politico reported, citing two anonymous Republican sources, that the White House plans to send a rescissions bill (appropriations bill) to Congress next week to formally propose the spending cuts.

The package is expected to target funding for NPR, PBS, and certain foreign aid agencies previously reduced under President Trump.

Here’s more from the report: 

The package set to land on Capitol Hill is expected to reflect only a fraction of the DOGE cuts, which have already fallen far short of Musk’s multi-trillion-dollar aspirations. The two Republicans said it will target NPR and PBS, as well as foreign aid agencies that have already been gutted by President Donald Trump’s administration.

House Speaker Mike Johnson stated that the House is “eager and ready” to act on the DOGE findings, while Senate Majority Leader John Thune and others voiced frustration over the delay.

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The CFPB wanted medical debt to be left off credit reports. That’s changed under Trump

David Deeds is in financial trouble, and he’s hoping a federal court in Texas can help get him out of it.

Deeds, who is 62 and owes tens of thousands of dollars in medical debt from cancer treatment, is involved in a complicated lawsuit filed by credit industry groups over the Consumer Financial Protection Bureau’s medical debt rule.

The rule, finalized in January just weeks before the end of the Biden administration, would have banned the reporting of medical debt from credit reports. At the time, the agency reported 15 million Americans would benefit from the change, removing $49 billion in medical debt from records. It was set to go into effect in March.

But new leadership appointed by President Trump now runs the CFPB. And the agency hasn’t just reversed its position on the consumer protection rule — last month, it joined forces with the plaintiffs who filed the suit trying to block it. The agency has not returned a request for comment from NPR.

Over the last few months, Judge Sean Jordan from Texas’ Eastern District has twice ordered a stay, delaying the rule’s start date to July 28. He is likely to make a ruling on whether or not to vacate it by mid-June.

The outcome of the suit, filed on the same day the rule was issued, has important financial implications for Deeds, as well as the millions more whose medical debt has negatively impacted their credit scores.

“My credit was and is very important to me, because it is necessary to secure housing, transportation, and employment, and make sure that I’m never homeless again,” Deeds said in an affidavit filed on Feb. 24, by a consumer advocacy group intervening in the lawsuit.

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Decade after Tea Party movement, conservatives still unable to meaningfully cut debt

As President Donald Trump’s “big, beautiful bill” moves toward a final vote in the House, conservative budget hawks are livid that it largely fails to offer spending cuts to their satisfaction, marking the latest in a long line of punts for the House GOP that has repeatedly vowed to address the national debt.

Republicans have long campaigned on addressing the debt, with the Tea Party movement notching historic election wins under President Barack Obama. In 2010, Republicans won control of the House and reduced the Democratic majority in the Senate. Yet, even when Trump first took office, Congress did not pass a balanced budget. 

Under President Joe Biden, House conservatives aggressively pushed then-Speaker Kevin McCarthy to agree to budget concessions when challenging his leadership. His attempts failed to satisfy debt hawks and McCarthy lost his post in October 2023. His replacement, Speaker Mike Johnson, R-La., reportedly frustrated fiscal conservatives, perhaps even more so than his predecessor.

The mega-bill

Johnson repeatedly passed continuing resolutions to maintain spending at Biden-era levels, despite promising to separately pass all 12 appropriations bills to fund the government through the traditional process. His tenure has seen firebrands, such as Reps. Marjorie Taylor Greene, R-Ga.; Thomas Massie, R-Ky.; and Chip Roy, R-Texas, all publicly lament the unwillingness of Congress to address spending and other campaign promises. The three voted “present” in a late Sunday night session, allowing the bill to go forward, with Roy revealing there was progress on moving up the start date for new Medicaid work requirements and speeding up the phaseout of green energy incentives.

The current House plan of passing a mega-bill to address all of Trump’s key priorities is still drawing fire from the same livid budget hawks. Several of them delayed the bill’s advancement through key committees, although a floor vote is now in the offing. “The US credit rating being downgraded is evidence of how our fiscal house is out of order,” Rep. Ralph Norman, R-S.C., said Monday.

The Trump administration has pinned most of its legislative hopes on passing a single piece of legislation through the House and Senate and using the budget reconciliation process to include many of his tax and border security promises. Trump has repeatedly hinted at passing a balanced budget during his second term, though the mega-bill appears nowhere close to accomplishing that goal.

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Germany’s Fiscal Suicide

Germany’s general state debt spiral should be a constant feature in daily headlines. Its prominence should force policymakers into a radical fiscal turnaround. Yet while Germany is working under immense pressure to ban the AfD, forming alliances with left-wing extremists and eroding the political culture, on the other side of the Atlantic, preparations are underway for the approaching storm.

We live in record-breaking times. In the first quarter of this year, global debt surged to a record high of $324 trillion. This milestone becomes significant when compared to global GDP, which currently hovers around $110 trillion. Governments worldwide now owe 100% of GDP — an alarming reality, as no modern state has ever managed to free itself from the ensuing fiscal bind once this threshold is reached. Debt levels of 80-90% mark the “point of no return.”

The Tipping Point of the Debt Spiral

At this scale, debt reaches a critical mass. It inevitably forces an escalating debt service burden that drains scarce capital from the private sector to finance bloated social funds, ultimately leading to the same scenario we faced 15 years ago during the last severe sovereign debt crisis. Back then, Greece’s impending default sent shockwaves across credit markets. Central banks intervened with trillions, and governments stepped in to rescue debt-laden pension funds and banks with taxpayers’ money.

Greece’s national debt stood at 143% at the onset of this crisis, and it is now about 155% — no debt consolidation has occurred. The southern European countries are, quite frankly, sinking into a swamp of debt. Italy, with 140%, Spain at 120%, and France’s budget deficit at 7%, leave much to be desired. On average, the EU’s debt-to-GDP ratio is now approaching 95%, closing in on the global benchmark of 100%.

Bond Vigilantes Lurk in the Markets

We must now prepare for the moment when a tipping point in bond markets triggers a series of sovereign defaults. This will occur when a growing crisis of confidence among investors, banks, and investment funds translates into a sell-off cascade in the bond markets. Let’s keep an eye on interest rates: if they rise with high volatility and market volume, general unrest is on the horizon. We have already witnessed the emergence of “bond vigilantes” this year — critical bond investors who pull the plug when debt levels rise. On the day it was announced that Germany would borrow about a trillion euros over the next four years and issue corresponding bonds, the interest rates on German bonds surged by more than 40 basis points.

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Sustainable Debt Slavery

The UN’s 2030 Agenda for Sustainable Development is pitched as a “shared blueprint for peace and prosperity for people and the planet, now and into the future.” At the heart of this agenda are the 17 Sustainable Development Goals, or SDGs. 

Many of these goals sound nice in theory and paint a picture of an emergent global utopia – such as no poverty, no world hunger and reduced inequality. Yet, as is true with so much, the reality behind most – if not all – of the SDGs are policies cloaked in the language of utopia that – in practice – will only benefit the economic elite and entrench their power. 

This can clearly be seen in fine print of the SDGs, as there is considerable emphasis on debt and on entrapping nation states (especially developing states) in debt as a means of forcing adoption of SDG-related policies. It is then little coincidence that many of the driving forces behind SDG-related policies, at the UN and elsewhere, are career bankers. Former executives at some of the most predatory financial institutions in the history of the world, from Goldman Sachs to Bank of America to Deutsche Bank, are among the top proponents and developers of SDG-related policies. 

Are their interests truly aligned with “sustainable development” and improving the state of the world for regular people, as they now claim?  Or do their interests lie where they always have, in a profit-driven economic model based on debt slavery and outright theft?

In this Unlimited Hangout investigative series, we will be exploring these questions and interrogating – not only the power structures behind the SDGs and related policies – but also their practical impacts. 

In this first instalment, we will explore what actually underpins the majority of the 2030 Agenda and the SDGs, cutting through the flowery language to deliver the full picture of what the implementation of these policies means for the average person. Subsequent instalments will focus on case studies based on specific SDGs and their sector-specific impacts. 

Overall, this series will offer a fact-based and objective look at how the motivation behind the SDGs and Agenda 2030 is about retooling the same economic imperialism used by the Anglo-American Empire in the post-World War II era for the purposes of the coming “multipolar world order” and efforts to enact a global neo-feudal model, perhaps best summarized as a model for “sustainable slavery.”

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DOGE Announces Deactivation of 500,000 Federal Credit Cards

The Department of Government Efficiency (DOGE) said on May 7 that it has canceled about half a million “unneeded” credit cards used by federal agencies.

In a post on social media platform X, DOGE wrote that over the past 10 weeks, its program to audit “unused” or “unneeded” credit cards has been expanded to 32 federal agencies.

DOGE, led by tech billionaire and Trump administration adviser Elon Musk, said that more than 500,000 agency credit cards were deactivated in that time period, out of roughly 4.6 million active cards and accounts used by the government.

“So, still more work to do,” the organization wrote in the post, which included a screenshot of a spreadsheet showing the canceled agency cards.

The spreadsheet showing what cards were canceled included ones used by the Office of Personnel Management, General Services Administration, Labor Department, Small Business Association, Treasury Department, Commerce Department, Interior Department, Education Department, Environmental Protection Agency, Housing and Urban Development Department, Defense Department, Health and Human Services Department, State Department, and others.

The May 7 statement means that DOGE has canceled another 30,000 credit cards used by agencies since mid-April, when it provided the last update on the effort.

At the time, Musk reposted DOGE’s comment and claimed that “twice as many credit cards are issued and active than the total number of government employees.”

DOGE’s website says that it has saved about $165 billion, or $1,000 per taxpayer, since it was established through an executive order issued by President Donald Trump in January.

Days before that, top congressional Democrats alleged that DOGE, the Trump administration, and Musk were holding up some $430 billion in funds that they said were appropriated by Congress.

Trump’s drive to downsize and reshape the federal government has already led to the dismantling of entire agencies, such as the U.S. Agency for International Development and the Consumer Financial Protection Bureau.

DOGE has been a major part of that effort, and the White House has said it is responsible for tackling what it calls fraud, waste, and abuse in the federal government, while streamlining operations.

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