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US Treasury Posts Gigantic $1.16 Trillion Shortfall in Fiscal 2017, Hilariously Points out “Where We Are Headed”


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2018 Feb 20, 3:46pm   8,196 views  40 comments

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If a tree fell in a forest and nobody heard it, did it really make a sound?” asks our favorite fiscal gadfly and Director of Research at Truth in Accounting, Bill Bergman, referring to the media coverage that the Treasury Department’s “Fiscal Year 2017 Financial Report of the U.S. Government” has received, which was, at the time he wrote it 24 hours after the February 15 release of the report: “Nothing. Zip. Scratch.”

Friday’s issue of the Wall Street Journal did not say a word about our public purse, or what happened to it last year. In the “What’s News” section on the front page, we learn about compelling things like “Billionaire investor Thiel is relocating to Los Angeles,” “Nestle’s sales growth last year was the slowest in decades,” and “U.S. motor vehicle deaths remained near decade-high levels in 2017.”

But we don’t learn anything about the financial condition of the federal government, from neither the Wall Street Journal nor the New York Times.

The largest financial institution in world history issued its annual report yesterday, and nobody cares.

That’s probably a good thing, given the kind of fiasco it is:

Here’s a summary of the salient data points of the FY 2017 Financial Report of the U.S. Government (full PDF).

•“Net cost” before taxes and other revenues rose by $129 billion year-over-year, or 2.9%, to $4.5 trillion.

•Tax and other revenues grew by $29.3 billion year-over-year, or 0.9%, to $3.4 trillion.

•The difference, the Net Operating Cost or the “bottom line,” as the report calls it, soared 10% year-over-year to $1.157 trillion.

•The Budget Deficit, a different measure, grew by $78.3 billion, or 13.3%, to $665.7 billion.

The Net Operating Cost ($1.157 trillion) is defined as revenues minus costs. The Budget Deficit ($665.7 billion) is defined as receipts minus outlays (cash spent). The difference of $491 billion between the two is, according to the report, “primarily due to accrued costs (incurred but not necessarily paid) related to increases in estimated federal employee and veteran benefits liabilities and certain other liabilities that are included in net operating cost, but not the budget deficit.”

So the Net Operating Cost is a more realistic measure of the actual gap between the government’s revenues and expenditures.

This chart from the report compares the Net Operating Cost and the Budget Deficit over the past five years. Note that the Net Operating Cost and the Budget Deficit increased for the second year in a row:





Where We Are Headed”

That $1.156 trillion in Net Operating Cost occurred in fiscal 2017. But these are the good times, the boom years, if you will, when shortfalls should shrink into oblivion.

So what will happen to the shortfall when the economy slows down or goes into a recession? That was a rhetorical question.

For fiscal 2018 and going forward, the tax cuts will lower revenues by about $150 billion per year on average over the next ten years. And for fiscal 2018 and 2019, Congress passed the two-year budget resolution that will add about $150 billion on average per year to the outlays.

Both combined will drive up the deficit by about $300 billion a year on average.



https://wolfstreet.com/2018/02/19/us-treasury-posts-gigantic-1-16-trillion-shortfall-in-fiscal-2017-hilariously-points-out-where-we-are-headed/#comments
#Economics

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1   Heraclitusstudent   2018 Feb 20, 3:59pm  

Trillions dollars deficits are about to become routine and we'll probably see 2 trillions+ deficits in the next recession.
2   Heraclitusstudent   2018 Feb 20, 4:00pm  

Republicans who condone Trump lost the right to complain about debt - forever.
3   HappyGilmore   2018 Feb 20, 5:00pm  

Heraclitusstudent says
Republicans who condone Trump lost the right to complain about debt - forever.


That assumes they care about being a hypocrite.
4   Bd6r   2018 Feb 20, 5:49pm  

MAGA! Fiscal responsibility! Let's lower taxes while increasing spending!

But seriously, this will not end good. And it is likely that Trump will be president when shit will hit the fan. Obviously, it will still be Obama fault, just like anything bad in Obama years was Bush fault
5   anonymous   2018 Feb 20, 7:44pm  

Print, baby, print!
6   anonymous   2018 Feb 20, 7:44pm  

Kakistocracy says
That $1.156 trillion in Net Operating Cost occurred in fiscal 2017.


Isn't nice Obama fucked over the country before heading out the door?
7   anonymous   2018 Feb 20, 7:44pm  

Heraclitusstudent says
Republicans who condone Trump lost the right to complain about debt - forever.


Except the OP happened on Obama's watch, not Trump's.
8   Al_Sharpton_for_President   2018 Feb 20, 8:19pm  

Why can’t this continue? If the so-called bond vigilantes existed, interest rates would never have remained so low in the USA. Folks continually incorrectly apply the analogy of a business or household when talking about governement finances. But businesses (except banks) and households can’t create money out of thin air.
9   lostand confused   2018 Feb 20, 8:30pm  

I am a little scared. Bush added 5 trillon, Obama added 10 trillion and looks like Trump will add another 10 trillion more or less?

If this country tips over, with zombie liberals SJWs, crazy people, mentally ill and guns-God that would be scary.

I guess living in the frozen tundra has its advantages-the hordes would go after the Californians and Floridians first.
10   Heraclitusstudent   2018 Feb 20, 9:18pm  

anon_cf6c6 says
Heraclitusstudent says
Republicans who condone Trump lost the right to complain about debt - forever.


Except the OP happened on Obama's watch, not Trump's.

You don't get it.
Add tax cuts and extra spending, the $ trillion deficit is already baked in - even before the next recession starts.
11   Heraclitusstudent   2018 Feb 20, 9:23pm  

willywonka says
Why can’t this continue? If the so-called bond vigilantes existed, interest rates would never have remained so low in the USA. Folks continually incorrectly apply the analogy of a business or household when talking about governement finances.


Yeah the government can print money or tax it back, except it could end up in a situation where all options would cause a depression. (cutting spending, taxing, printing money, continuing with deficit spending).
Printing money is not a recipe for economic prosperity.
12   Heraclitusstudent   2018 Feb 20, 9:25pm  

lostand confused says
I am a little scared. Bush added 5 trillon, Obama added 10 trillion and looks like Trump will add another 10 trillion more or less?

Project the exponential trend... Trump will add $20 trillions in 8 yrs. Or close to that. Or we will end up in a radically different economic regime.
13   anonymous   2018 Feb 21, 1:02am  

Heraclitusstudent says
Project


There's the MAIN problem.

You're OK with the factual detail of Obama tacking on 10 Trillion, that wasn't a problem, but want to run with your hair on fire based on unproven "projections" of future unknown debt.

Liberal Logic.
14   lostand confused   2018 Feb 21, 4:33am  

One thing I don't like is there is no mention of cutting the govt by repubs. They even want to ramp up the drug war.
15   anonymous   2018 Feb 21, 7:36am  

lostand confused says
and looks like Trump will add another 10 trillion more or less?


He's going to add much, much more. It's $10T best case, assuming we hit unrealistic growth targets and don't have a recession.
16   anonymous   2018 Feb 21, 8:37am  

Heraclitusstudent says
Yeah the government can print money or tax it back, except it could end up in a situation where all options would cause a depression.

Under what circumstances would governement debt cause a depression?
17   Bd6r   2018 Feb 21, 8:46am  

anon_cf6c6 says
You're OK with the factual detail of Obama tacking on 10 Trillion, that wasn't a problem, but want to run with your hair on fire based on unproven "projections" of future unknown debt.


Bush 5T was a problem. Obama 10T was a twice bigger problem. Trump $20T will be a four times bigger problem, which may finally be fatal to US economy. It is quite interesting to see that for D's, St.Obama deficit did not matter, while for R's neither Bush nor St. Trump deficits are important.
18   lostand confused   2018 Feb 21, 10:08am  

drB6 says
while for R's neither Bush nor St. Trump deficits are important.

While I am an independent, but lean right, I am worried about the amount of spending under trump-without the cuts.
19   Heraclitusstudent   2018 Feb 21, 10:12am  

anon_a9a72 says
Under what circumstances would governement debt cause a depression?

- if the interest rates soar to high levels from current low levels.
- if inflation soars to high levels
- if the government cuts spending drastically
- if the government raises taxes by a large amount
20   bob2356   2018 Feb 21, 11:46am  

drB6 says

Bush 5T was a problem. Obama 10T was a twice bigger problem. Trump $20T will be a four times bigger problem, which may finally be fatal to US economy. It is quite interesting to see that for D's, St.Obama deficit did not matter, while for R's neither Bush nor St. Trump deficits are important.


Only 1 party has been screaming for the last 9 years how bad deficits are. The one that just sent them through the roof.
21   anonymous   2018 Feb 21, 11:53am  

lostand confused says
One thing I don't like is there is no mention of cutting the govt by repubs.


Reliable sources have reported the following:

Republican lawmakers announced a plan to pretend to be fiscally conservative again if a Democrat takes office again in 2020 or 2024.

The GOP said it would begin to decry deficit spending and the $20 trillion debt in order to win votes as soon as political power swung back to the opposing party.

“The second a Democrat is back in the White House, we will once again start yelling about fiscal responsibility,”

Speaker Paul Ryan said in an address to the House of Representatives Friday. “For now, we will continue to vote for unsustainable and irresponsible budgets that your children’s children’s children will pay for, for centuries to come.”
22   Bd6r   2018 Feb 21, 12:05pm  

bob2356 says
Only 1 party has been screaming for the last 9 years how bad deficits are. The one that just sent them through the roof.

Not necessarily true, although R's are more vocal about deficits.

https://seekingalpha.com/article/4035742-krugman-worries-deficits-changed-bezeks-daily-briefing
23   bob2356   2018 Feb 21, 12:28pm  

drB6 says
Not necessarily true, although R's are more vocal about deficits.


By about 1000 to 1.

Here is Mitch McConnel going on and on about Obama deficit in 2010 after bush destroyed the economy. Mitch says the deficit is like nothing that has ever been seen and threatens our livelihood, our children, and our national security, Can he give this speech again soon?

www.youtube.com/embed/rD4gFLhJFcY
24   anonymous   2018 Feb 21, 12:35pm  

Heraclitusstudent says
if the interest rates soar to high levels from current low levels.
- if inflation soars to high levels
- if the government cuts spending drastically
- if the government raises taxes by a large amount

Sure, but what is the connection to trillion dollar government debt? As stated above, in spite of the level of US govt debt, interest rates have been at historic lows. Asset inflation has been the norm for quite a while, related to low rates. Raising taxes has not been a required action of debt issuance. Drastic spending cuts by the gov in the absence of counter-acting growth in spending by other sectors would be troubling, but nowhere in the four scenarios you offer is there any connection to growing trillion dollar debt.
25   anonymous   2018 Feb 21, 12:36pm  

Fake News & patnetters spreading it.

Dems & Reps will eliminate the Federal debt by July 4 ,2018.
U.S.A.! U.S.A.! U.S.A.!

I must be having an attack of di-min-tia.
Debt has never,ever,ever been a problem.Everyone knows that.
Lenders just say"It's OK! We understand that you failures can't repay your debt."
"We'll just write it off."
26   Bd6r   2018 Feb 21, 1:01pm  

bob2356 says
Can he give this speech again soon?

Of course no, he will give this speech only when D is a president. R had Bush for 2 years with R Dem/Senate also and somehow deficit just went up.
27   bob2356   2018 Feb 21, 3:13pm  

drB6 says
somehow deficit just went up.


Like a giant tax cut for the 1% and increasing spending. Seems to be a repeating theme for one of the parties.
28   anonymous   2018 Feb 21, 4:04pm  

anon_72630 says
Lenders just say"It's OK! We understand that you failures can't repay your debt."
What nonsense! The debt is always repaid, today, by borrowing money. Yes, it can go on forever as long as current due debt is paid.
29   MisdemeanorRebel   2018 Feb 21, 4:07pm  

Kakistocracy says
Republican lawmakers announced a plan to pretend to be fiscally conservative again if a Democrat takes office again in 2020 or 2024.


Just like Democrats dismissed complaints about QE and record-busting $10T (a doubling) of the debt during the Obama Years, yet rediscovered fiscal policy after November 8th, 2016.

Here's one way for the Dems to show they're tough on spending: Require states to confirm welfare recipients are US Nationals or lose Medicaid/AFDC funding for the ones they don't verify. Will save billions a year.
31   MisdemeanorRebel   2018 Feb 21, 4:14pm  

House Dems, 2015:
"We MUST raise the debt ceiling. MOAR Debt!"
https://www.c-span.org/video/?328926-1/house-democrats-debt-limit
Dems-Trump agree to eliminate debt limit
http://www.businessinsider.com/trump-schumer-pelosi-deal-debt-ceiling-hurricane-harvey-2017-9
So what are the Dems complaining about?
32   anonymous   2018 Feb 22, 6:46am  

TwoScoopsPlissken says
Kakistocracy says
Republican lawmakers announced a plan to pretend to be fiscally conservative again if a Democrat takes office again in 2020 or 2024.


Just like Democrats dismissed complaints about QE and record-busting $10T (a doubling) of the debt during the Obama Years, yet rediscovered fiscal policy after November 8th, 2016.

Here's one way for the Dems to show they're tough on spending: Require states to confirm welfare recipients are US Nationals or lose Medicaid/AFDC funding for the ones they don't verify. Will save billions a year.


Sounds like it will cost more than it saves
33   Heraclitusstudent   2018 Feb 22, 11:01am  

anon_0c33d says
Sure, but what is the connection to trillion dollar government debt? As stated above, in spite of the level of US govt debt, interest rates have been at historic lows. Asset inflation has been the norm for quite a while, related to low rates. Raising taxes has not been a required action of debt issuance. Drastic spending cuts by the gov in the absence of counter-acting growth in spending by other sectors would be troubling, but nowhere in the four scenarios you offer is there any connection to growing trillion dollar debt.


The connection is obvious. Debt levels have been relatively low so far, but as debt rises, options become more limited.
34   Heraclitusstudent   2018 Feb 22, 11:02am  

anon_cf6c6 says
You're OK with the factual detail of Obama tacking on 10 Trillion, that wasn't a problem

I'm not ok with that, but at least Obama had the excuse of fighting a recession then reducing the deficit from there.
35   anonymous   2018 Feb 22, 12:00pm  

Heraclitusstudent says
anon_cf6c6 says
You're OK with the factual detail of Obama tacking on 10 Trillion, that wasn't a problem

I'm not ok with that, but at least Obama had the excuse of fighting a recession then reducing the deficit from there.


So when the next recession hits under Trump (which it probably will, since we're due), you'll be OK with him printing Trillions to fight it too?
36   MisdemeanorRebel   2018 Feb 22, 12:12pm  

errc says
Sounds like it will cost more than it saves


How much could scanning a birth certificate, naturalization paper, etc. one time cost? $10, including labor and overhead?

A lot less than hundreds of dollars a month in benefits for years and years.

"We need 1000 new $50k/year teachers, but a hundred $11/hr security guards are too expensive!"
"We need to spend thousands more a year on impoverished families, but $10 one-time to verify they're eligible for benefits is too expensive!"
37   bob2356   2018 Feb 22, 5:35pm  

TwoScoopsPlissken says
Here's one way for the Dems to show they're tough on spending: Require states to confirm welfare recipients are US Nationals or lose Medicaid/AFDC funding for the ones they don't verify. Will save billions a year.


Any proof of this? You have to provide a lot of documentation to apply. Want to document how many manage to provide fake documents for all of the requirements? I'll wait, and wait, and wait.

Maybe dems should go after the really big welfare bucks. Defence and agriculture departments.
38   Heraclitusstudent   2018 Feb 22, 5:59pm  

anon_cf6c6 says
So when the next recession hits under Trump (which it probably will, since we're due), you'll be OK with him printing Trillions to fight it too?

I was not ok with Obama going down $1 Trillion, and won't be when Trump goes down $2 Trillions (since he is already down 1) if he is still president when the recession hits him. (we can't be too sure whether he is here for 2 yrs, 4 yrs, or 8yrs).

I'm just pointing out that there is a difference between borrowing a trillions to fight a recession and borrowing a trillion to make the masses feel better in an already good economy.
39   anonymous   2018 Feb 22, 8:52pm  

Heraclitusstudent says
The connection is obvious. Debt levels have been relatively low so far, but as debt rises, options become more limited.
I propose there is no limit to the amount of debt that can be issued and paid for partially or totally by more debt, but I would welcome seeing some math on the issue. And while I detest Geithner, I think he may have realized that the US casino must always pay out, especially when the entire system was in doubt.
40   MisdemeanorRebel   2018 Feb 22, 11:11pm  

bob2356 says
Any proof of this? You have to provide a lot of documentation to apply. Want to document how many manage to provide fake documents for all of the requirements? I'll wait, and wait, and wait.


One way not to find out how many fake recipients there are is not to check.

The same way Washington State runs their elections. It's the honor system, so nobody illegal votes. We know because it's an honor system so we don't check.

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