You all know that America’s fiscal situation is deteriorating rapidly, right?
Sure you do. And you’re probably also aware that Larry Kudlow’s protestations notwithstanding, the CBO is likely correct to suggest that Trump’s tax cuts are going to be seen in hindsight as a catastrophic mistake from the perspective of fiscal rectitude. Here’s what Kudlow told state TV on Tuesday about the CBO:
They’re always wrong, especially with regards to tax cuts, which they never score properly because they don’t understand the growth, the incentives and the encouragements to reward success.
Ok, Larry. I guess no one else (besides maybe Kudlow and Trump) “understands” this either because according to pretty much everyone who isn’t part of the administration, Trump’s fiscal policies are not only anomalous (in terms of the timing of fiscal stimulus), but are destined to balloon the deficit on the way to catapulting the U.S. into unchartered fiscal territory. Recall this chart from Goldman, for instance:
I’m not going to rehash this discussion at length here. If you’re interested and haven’t heard enough to convince you yet, then you can read any one of David Stockman’s recent pieces on the subject or, if you’d rather, you can check out the following posts that cite multiple sources including Credit Suisse, SocGen, Goldman, BofAML, and on and fucking on:
- Goldman Warns On U.S. Fiscal Policy: ‘We Are Heading Into Uncharted Territory’
- ‘Is Nobody Gonna Tell Him?’ MAGA And The Pedal To The Metal Economy
- ‘This Is Poorly-Timed’: Credit Suisse Ups Rate Hike Forecast Amid Budget Boondoggle
- Albert Edwards: ‘Trump’’s Grotesquely Ill-Timed Stimulus Will Be Trigger For Market Implosion, Recession’
And it’s hardly just Wall Street. Here’s an excerpt from a WaPo piece out yesterday that documents the Kudlow comments cited above on the way to reminding you that pretty much everyone says the same thing about the fiscal path we’re on:
Several other nonpartisan studies, as well as Wall Street analysts, also have disputed Republicans’ contention that the tax law will pay for itself. The Joint Committee on Taxation (JTC), Congress’s official scorekeeper, estimated in December that the tax law would cost $1.4 trillion over 10 years, or about $1 trillion when accounting for the effects of potentially higher growth
The Tax Policy Center, economists at Moody’s Analytics and the Committee for a Responsible Federal Budget have all also projected at least a $1 trillion hit from the law. The right-leaning Tax Foundation said that the plan would cost the nation at least $1.47 trillion over 10 years, or $448 billion factoring in higher growth.
So that brings us to today’s punchline, which comes courtesy of the IMF who, in the latest update to their World Economic Outlook (WEO) database, says that by 2023, America’s debt-to-GDP ratio will be some 117% which, if the fund’s projections are correct, will put the U.S. in worse shape than Italy.
This is a great time to roll out the following chart from last August (obviously this is grossly distorted by the trickle down effect of the ECB’s CSPP, but it’s still funny):
As Bloomberg notes, the U.S. “will also place ahead of both Mozambique and Burundi in terms of the weight of its fiscal burden:
What can you say? It’s all this “winning” I guess….
One thought on “By 2023, America Will Be In Worse Fiscal Shape Than Italy, Mozambique And Burundi”
OK, The lie that has been used by republicans from St. Ronnie to GB II that “these tax cuts will pay for themselves” is just that, horsesh*t to sell the public and damn the economic system into more and more debt. Time and again this ploy is used to preach about fiscal responsibility, fu*k everything up and then blame the system that they fu*ked up. Screw-up the government then blame the government for being screwed-up.
The democratic response has not been much better and usually encompasses some half heart-ed attempts to fix some of the fallout after the republicans crash our markets so their billionaire pals can swoop in and buy up the bottomed out companies who survive.
The scam has worked for decades, I have seen it and used it myself to my own advantage. Guess what ? It is going to happen and work again, however, this time it may well take the whole rotten system with it.
Rome is burning.