How Washington Learned to Love the Deficit

[jmyrlefuller]

Political support for taming federal debt has melted away, and the U.S. is testing just how much it can borrow
https://www.wsj.com/articles/how-washington-learned-to-love-the-deficit-11560436380


By Kate Davidson and
Jon Hilsenrath
June 13, 2019 10:33 a.m. ET

William Hoagland has engaged in nearly every Washington budget-deficit battle for four decades. A longtime analyst and onetime senior Republican congressional budget aide, he brought a sensibility learned growing up on an Indiana farm: You’ve got to balance the books over time.

He feels like a voice in the wilderness now.

The theories about debt and deficits and whether they matter—once widely shared in Washington, on Wall Street and in academia—have fundamentally changed.

Political support for taming deficits has melted away, with Republicans accepting bigger deficits in exchange for tax cuts and Democrats making big spending promises around 2020 election campaigns. Global demand for U.S. Treasury assets has displaced the “bond-market vigilante” mentality of the 1990s that scared Washington.

(excerpt)

[Formerly Once-Ler]

Trump repealed and replaced Obamacare, locked up crooked Hillary, drained the swamp, and built the Mexico funded wall...I think we can cut him some slack on spending. /sarc

[bilo]

Political support for taming deficits has melted away, with Republicans accepting bigger deficits in exchange for tax cuts and Democrats making big spending promises around 2020 election campaigns.

We only have ourselves to blame for this mess. If a politician runs for office on an austerity platform they don't have a chance. If an elected politician purposes a 1% cut for 10 years the proposal goes nowhere. If a politician presents any type of entitlement reform ads will be run with them pushing granny off a cliff.

When we reach the point that no one is buying treasuries because they are too risky we will have no one to blame but ourselves. I just hope it's not in my lifetime.

[Fishrrman]

"The debt" is no longer an issue in American politics, and anyone who makes waves about it will be dismissed as a crank by BOTH parties.

The debt is what it is. Not denying that. It will keep growing, until some kind of event happens which will prevent it from increasing any more. I sense that moment may yet be decades into the future.

No one who has the power to address the debt problem will ever do ANYTHING to that effect, so long as they can avoid having to do so.

Only when something happens after which they MUST do something, will they act. But then, "the actions" that they take will be seen as authoritarian and draconian. At that point, there will be no other choice.

That's the way it's gonna be.

Imagine a train without brakes, racing down a mountain grade. Nothing can stop it -- except to encounter a curve or some other obstacle which will totally wreck it. Once the wreck occurs, rescue and repair crews can then come in, clean up the wreckage, and rebuild the track so that normal traffic can resume.

But the clearing and rebuilding can only begin after the trauma of the wreck itself.

That's how the debt train's runnin' today.
No brakes to halt it or even slow it down, even if we wanted to.

What's ahead that's gonna wreck it?

[bilo]

"The debt" is no longer an issue in American politics, and anyone who makes waves about it will be dismissed as a crank by BOTH parties.

The debt is what it is. Not denying that. It will keep growing, until some kind of event happens which will prevent it from increasing any more. I sense that moment may yet be decades into the future.

No one who has the power to address the debt problem will ever do ANYTHING to that effect, so long as they can avoid having to do so.

Only when something happens after which they MUST do something, will they act. But then, "the actions" that they take will be seen as authoritarian and draconian. At that point, there will be no other choice.

That's the way it's gonna be.

Imagine a train without brakes, racing down a mountain grade. Nothing can stop it -- except to encounter a curve or some other obstacle which will totally wreck it. Once the wreck occurs, rescue and repair crews can then come in, clean up the wreckage, and rebuild the track so that normal traffic can resume.

But the clearing and rebuilding can only begin after the trauma of the wreck itself.

That's how the debt train's runnin' today.
No brakes to halt it or even slow it down, even if we wanted to.

What's ahead that's gonna wreck it?

Two things; inflation and lack of a market for the bonds that finance the deficit. These two things will coincide. The end result will be a complete upheaval of our economic and political systems.

[Absalom]

Originally the Federal Government was financed by Duties, Excises and Tariffs.
In 1909 Taft proposed an Income Tax Law.
In 1913 the 16th Amendment was adopted.
That change opened the door to deficits and debt.

[jmyrlefuller]

Originally the Federal Government was financed by Duties, Excises and Tariffs.
In 1909 Taft proposed an Income Tax Law.
In 1913 the 16th Amendment was adopted.
That change opened the door to deficits and debt.

We had things like the Bank of the United States before that, though... just under a different name and structure.

What really opened the door to debt was FDR's abolition of a metallic standard. That cleared the way to spend, spend, spend on his New Deal.

[Absalom]

We had things like the Bank of the United States before that, though... just under a different name and structure.

What really opened the door to debt was FDR's abolition of a metallic standard. That cleared the way to spend, spend, spend on his New Deal.

--------------------------
Fair analysis.