In January 2020, the Congressional Budget Office (CBO) projected that the federal budget deficit (a negative surplus) would total $1.015 trillion in fiscal year (FY) 2020 and $1 trillion in FY 2021.1 Those projections are now obsolete because of the many actions taken by government officials to fight the COVID-19 pandemic. These actions, while designed to prevent a health crisis of an unknown magnitude and duration, have nonetheless helped trigger massive job losses and the shuttering of businesses. A deep recession is likely. The deep recession will further increase the size of the federal budget deficit since lower economic activity will reduce tax revenues and automatically increase certain types of federal expenditures (e.g., unemployment benefits).
This is an interesting article, but when you get to the end, you have to think something missing.
The U.S. Treasury on Friday said that the federal deficit for fiscal 2019 was $984 billion, a 26% increase from 2018 but still short of the $1 trillion mark previously forecast by the administration.
The gap between revenues and spending was the widest it’s been in seven years as expenditures on defense, Medicare and interest payments on the national debt ballooned the shortfall.
"As Congress prepares to debate a year-end spending bill and President Trump prepares for trade talks with China's President Xi Jinping, these are some terms you're likely to hear used — and occasionally misused — by politicians and pundits. Bone up on your political and economic vocabulary so you'll sound smart on the holiday party circuit."
"Corporate debt is at its highest level relative to U.S. GDP since the financial crisis , and while not now a concern, that mountain of corporate IOUs could quickly turn into a heap of worry under the right circumstances."
"Fueled by low interest rates and strong investor appetite, debt of nonfinancial companies has increased at a rapid clip, to $8.7 trillion, and is equal to more than 45 percent of GDP, according to David Ader, chief macro strategist at Informa Financial Intelligence."
"According to the Federal Reserve, nonfinancial corporate debt outstanding has grown by $1 trillion in two years."
"Everything is fine until it isn't," Ader said. "We don't need to worry about that until we're in a slowdown and profit declines."
"Low rates have encouraged companies to borrow, but instead of using the money to expand, they have used it to boost their share prices, he said."
"When Republicans began assembling their tax overhaul proposals they were aiming to make them revenue neutral; the tax cuts could not lead to increased deficits. Holding the line on deficits has long been the goal of Republican deficit hawks."
"But that goal is now just a memory. Both the House and Senate proposals provide overall tax cuts in the $1.5 trillion range over the next decade. But there's no plan to offset them with cuts in government spending or new revenues. So over the next 10 years, the tax cuts are likely to add about $1.5 trillion to the national debt, according to the nonpartisan Congressional Budget Office."
"The establishment is trying to pull a big one over on the public yet again. One of the designated topics for the last presidential debate goes under the heading, "debt and entitlements." This should have people upset for several reasons.
The first is simply the use of the term "entitlements." While this has a clear meaning to policy wonks, it is likely that most viewers won't immediately know that "entitlements" means the Social Security and Medicare their parents receive. It's a lot easier for politicians to talk about cutting wasteful "entitlements" than taking away seniors' Social Security and Medicare.
The ostensible purpose of the debate is to allow voters to be better informed about the candidates' views. So if the purpose is conveying information, why not use terms that most voters will understand?"
“Historically, when one party controls both houses of Congress and the White House, the deficit goes up,” says William Gale, a senior fellow at the Brookings Institution. “You’ve got your hands in the cookie jar.”