Category : The U.S. Government

(FT) US debt burden to top world war two peak in coming years, watchdog says

The US’s federal debt burden is set to surpass the peak it reached in the wake of the second world war in coming years, Congress’s fiscal watchdog has warned, underscoring growing concerns over America’s public finances.

The Congressional Budget Office said on Thursday that the US’s debt-to-GDP ratio would reach 107 per cent during the 2029 fiscal year — exceeding the 1940s era peak — and continue rising to 156 per cent by 2055. The debt-to-GDP ratio is forecast to be 100 per cent for the 2025 fiscal year.

The projections come just days after Moody’s delivered a warning about the sustainability of the US’s fiscal position, with the rating agency saying that President Donald Trump’s trade tariffs could compromise attempts to bring its large federal deficit under control by raising interest rates.

“Mounting debt would slow economic growth, push up interest payments to foreign holders of US debt and pose significant risks to the fiscal and economic outlook; it could also cause lawmakers to feel constrained in their policy choices,” the CBO said on Thursday.

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Posted in * Culture-Watch, America/U.S.A., Ethics / Moral Theology, The National Deficit, The U.S. Government

(FT) Moody’s warns on deteriorating outlook for US public finances

Credit rating group Moody’s has warned on the US fiscal outlook, saying President Donald Trump’s trade tariffs could hamper the country’s ability to cope with a growing debt pile and higher interest rates.

The rating agency said on Tuesday that America’s “fiscal strength is on course for a continued multiyear decline”, having already “deteriorated further” since it assigned a negative outlook to America’s top-notch triple A credit rating in November 2023.

While Moody’s highlighted the “extraordinary” economic resilience of the US and the role of the dollar and the Treasury market as backbones of the global financial system, its analysts also warned on Tuesday that the policies of the second Trump administration — including sweeping tariffs and plans for tax cuts — could do more harm than good for government revenues.

“The potential negative credit impact of sustained high tariffs, unfunded tax cuts and significant tail risks to the economy have diminished prospects that these formidable strengths will continue to offset widening fiscal deficits and declining debt affordability,” Moody’s said.

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Posted in * Economics, Politics, America/U.S.A., Budget, Economy, President Donald Trump, The U.S. Government

(Washington Post) The Free-living Bureaucrat–Michael Lewis on Heather Stone of the Food and Drug Administration

If they’d been asked to write an autopsy of their marriage, Walter and Amanda Smith might have agreed that the cause of death was their lack of understanding of the institution. By the summer of 2021, they were like two people who had formed their own country before agreeing on the rules of citizenship. Walter was drinking too much and going through the motions; Amanda felt trapped and separated from the identity she’d been handed as a child. “I was raised to be a ray of sunshine inside,” she liked to say. “I’m supposed to be the joy of the room.” To which one day Walter blurted out, “You are not a ray of sunshine. You’re a black cloud.” Since they’d collided 10 years earlier in a Texarkana roadside bar — Amanda was the waitress who didn’t mind that Walter had already had too much to drink — they’d never spent a night apart. Both were easy on the eye and quirky and impulsive and extraordinarily willful. Both were also unhappy. Walter had ballooned to 250 pounds and was going through two six-packs of Budweiser a night. Amanda had decided that marrying Walter Smith after knowing him for only five months was the biggest mistake of her life — which was saying something.

Still, at first glance, they appeared to have built a life together. They’d bought a place with land around it outside De Queen, Arkansas. Walter had taken a good, if all-consuming, job fixing anything that broke inside a massive coal-fired power plant an hour’s drive away. At one stretch, he worked 12-hour shifts for 93 straight days. They’d accumulated a vast number of animals: chickens, goats, rabbits and cats, along with a surprising number of dogs. “I pick up dogs off the side of the road,” explained Amanda. Inside of six years, Amanda had given birth to three children and was pregnant with a fourth. Walter insisted on naming their first, a boy. Hunter, he’d called him, after one of his favorite writers, Hunter S. Thompson. By cobbling together names from Amanda’s side of the family, he’d named their second child, too, a daughter: Alaina. After that, Amanda seized back the naming rights and, for reasons Walter has never learned, called their third child Henry. The fourth time around, Amanda was racked with indecision. “Infant Smith,” read the baby boy’s birth certificate for the first three months after his birth. “I thought, she’s going to come up with some wild shit,” Walter said. “And one day she says it: Johnathan. And I’m like, ‘You got to be sh*&^ing me.’ It took you three months to call him John Smith?”

At a glance, they were a union, but by the summer of 2021, they were engaged in something closer to civil war. “I’m doing all the things I’m supposed to do,” Walter said. “But I wasn’t willing to do the shit that made her happy. I was doing the shit that would shut her up. I would do everything I could to keep her off my ass so she would feel guilty to ask me to quit drinking.” For example, he knew that Amanda wanted to rely less on processed foods and more on what they grew themselves. The soil on their farm was poor — just gravel and red clay that required a pickax to dent. And so before Amanda could think to ask him, Walter hauled in endless sacks of enriched soil and erected four massive garden beds.

As he worked, Alaina, then 5 years old, went out to watch and play. She loved hanging around her father. Making mud pies was her favorite hobby. Walter thought nothing of it until he looked up and saw Alaina enveloped in a dust cloud. “Hey, baby, get out from downwind of that,” he said. For a moment, he worried about the effect on her lungs of the dust. But then Alaina moved, and Walter returned to the job of making his wife unhappy.

And so their small nation was divided when its first external threat presented itself. The moment from Sept. 10, 2021, is still vivid in Amanda’s mind. “Hunter runs in and says, ‘Mom, when I’m talking to Alaina, she’s not talking back to me.’”

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Posted in Blogging & the Internet, Children, Health & Medicine, History, Labor/Labor Unions/Labor Market, Marriage & Family, Pastoral Theology, Science & Technology, The U.S. Government

(NYT)  David Wallace-Wells takes a look back at the Covid19 pandemic after five years

The pandemic response wasn’t perfect. But the pandemic itself was real, and punishing. Above all, it revealed our vulnerability — biological, social and political. And in the aftermath of the emergency, Americans have largely looked away, choosing to see the experience less in terms of death and illness than in terms of social hysteria and even public health overreach. For many, the main lesson was that in the world of humans, as in the world of microbes, it’s dog-eat-dog out there.

But the consequences and aftershocks were also more subtle and diffuse: it isn’t easy to live in isolation and in fear, often largely online and surrounded by exceptional illness and mortality, as we watched aspects of the world and our own lives we’d long taken for granted be withdrawn or torn apart. And it isn’t easy to get over all that, however eager we thought we were to “return to normal.” We lived through as many deaths as some of the worst-case scenarios predicted, and without an initial spasm of inspiring solidarity and miraculous biomedical intervention, it could have been worse. But when we came out the other side — 1.5 million fewer of us — we were, as a country, exhausted, resentful, deluded and distrustful. A huge amount of the world in which we now reside was formed in that crucible. I will write more about that next week.

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Posted in America/U.S.A., Anthropology, China, Ethics / Moral Theology, Globalization, Health & Medicine, History, Politics in General, Science & Technology, The U.S. Government, Theology

(Bloomberg) T. Rowe Raises Prospect of 6% Treasury Yields on Fiscal Risk

Treasury 10-year yields may climb to 6% for the first time in more than two decades as US fiscal woes worsen and Donald Trump’s policies help keep inflation elevated, according to T. Rowe Price.

The benchmark yield may first reach 5% in the first quarter of 2025 before potentially climbing further, Arif Husain, chief investment officer of fixed-income, wrote in a report. Husain is doubling down on calls for higher yields, citing persistent US budget deficits as Trump cuts taxes during his second presidency, as well as potential tariffs and immigration policies that would sustain price pressures.

“Is a 6% 10‑year Treasury yield possible? Why not? But we can consider that when we move through 5%,” wrote Husain, who helps the money manager oversee $187 billion. “The transition period in US politics is an opportunity to position for increasing longer‑term Treasury yields and a steeper yield curve.”

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Posted in * Economics, Politics, Budget, Credit Markets, Economy, The National Deficit, The U.S. Government

(CFRB) Gross National Debt Reaches $36 Trillion

As if lawmakers needed any other reasons to take America’s fiscal health seriously, the gross national debt of the United States has now officially reached $36 trillion. We started 2024 by crossing the $34 trillion threshold, added another trillion during the summer, and now we’re heading into the holidays with yet another trillion. Government borrowing is becoming as certain as the changing of the seasons these days.

It’s often said that the more times you say a word over and over, the more it starts to lose its meaning. With so many trillion-dollar debt milestones in recent years, it’s easy to forget that each of them has real-world consequences.

But rising debt poses serious domestic and geopolitical risks: it slows our economy, threatens higher inflation and interest rates, and squeezes our budget through higher interest rates. And it hampers our ability to be flexible in responding to recessions and disasters at home and foreign crises abroad.

And the future trajectory looks bleak as well.

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Posted in * Economics, Politics, Budget, Economy, The National Deficit, The U.S. Government

(Defense One) What Trump’s win means for the federal workforce

Donald Trump is projected to return to the White House next January, according to the Associated Press, and is poised to spur the most dramatic reimagining of the staffing of government in more than a century.

That’s because Trump has vowed to revive Schedule F, a controversial abortive effort at the end of his first term to strip the civil service protections of potentially tens of thousands of career federal workers in “policy-related” positions, effectively making them at-will employees. Trump and many of his former staffers have frequently bemoaned that “rogue bureaucrats” inhibited his policymaking power during his first stint in the White House.

Though President Biden quickly rescinded Schedule F when he took office in 2021—before any positions could be converted out of the federal government’s competitive service—that hasn’t stopped Trump and his allies from working on the initiative in absentia. Both the Heritage Foundation and America First Policy Institute, which have organized dueling unofficial transition projects have endorsed reviving Schedule F, going so far as to creating lists of upwards of 50,000 current career civil servants to strip of their removal protections and threaten with termination.

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Posted in * Economics, Politics, Economy, Labor/Labor Unions/Labor Market, Office of the President, President Donald Trump, The U.S. Government

(W Post) As smuggling rings made billions from migrants, the U.S. was sidelined

He called himself a simple onion farmer, a Mayan Indian with four kids and a fourth-grade education.

U.S. prosecutors knew better.

By his late 30s, Felipe Diego Alonzo had built a crime route stretching from Central America to Texas, allegedly paying off Mexican drug cartels along the way. He tooled around Guatemala’s western highlands in a loaded silver Ford Ranger pickup. When the police finally raided his ranch, they found a study in rural narco-chic: wooden chalets, a swimming pool, a show horse valued at $100,000.

What they didn’t find was a narco. Alonzo’s business “was more profitable than drug trafficking,” said one of the Guatemalan officials who detained him.

Alonzo was moving people.

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Posted in * Economics, Politics, --Guatemala, Colombia, Economy, Ethics / Moral Theology, Foreign Relations, Immigration, Law & Legal Issues, The U.S. Government

(W Post) George Will–A mountain of government payments buries the myth of American self-reliance

Payments from government entitlement programs — transfer payments — are the fastest-growing major component of citizens’ personal income. Such transfers are the third-largest source of personal income: In 2022, the average citizen received almost as much from government transfers ($11,500) as from investments ($12,900), and more than one-quarter as much money as was obtained from work. This average citizen received six times more (adjusted for inflation) in government transfer payments than in 1970, during which span income from other sources increased less than half as much. Transfers’ share of total (inflation-adjusted) personal income has more than doubled since 1970, from 8.2 percent to 17.6 percent in 2022.

The Washington-based Economic Innovation Group, which promotes economic dynamism, has released a report, “The Great ‘Transfer’-mation,” explaining how swiftly U.S. communities became dependent on government transfer payments. In 2022, Americans received $3.8 trillion in government transfers, 18 percent of all personal income. In 1970, not even 1 percent of counties received one-quarter or more of personal income from transfers. By 2000, 10 percent did; in 2022, it was 53 percent. This is certain to increase as the population ages.

The primary explanation: the aging U.S. population.

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Posted in * Economics, Politics, America/U.S.A., Economy, History, Medicaid, Medicare, Social Security, The U.S. Government

(RS) Welcome to the defense death spiral

The Death Spiral is one of the main Pentagon Pathologies. The American people devote ever greater resources to their defense while receiving less and less in return. The Air Force had 10,387 aircraft in 1975 when the Military Reformers began their work in earnest. Today the Air Force has 5,288. The Navy had 559 active ships in 1975. Today the fleet has only 296. The Pentagon’s base budget is more than 60% higher today than it was in 1975, when adjusted for inflation. The American people simply spend more and receive much less in return for their defense dollars.

An argument can be made that modern military equipment is more expensive because of the capabilities they provide the troops. That is extremely debatable because many of the high-profile acquisition programs over the past 25 years have been underwhelming at best, and often complete failures. It is difficult to find anyone who will honestly say the Littoral Combat Ship was worth the effort.

Left unchecked, the acquisition Death Spiral’s inevitable destination is unilateral disarmament. Norman Augustine, a former DoD official and Lockheed Martin CEO predicted in 1983, with only a hint of satire, that by 2054, “the entire defense budget will purchase just one aircraft. This aircraft will have to be shared by the Air Force and Navy 3-1/2 days each per week except for leap year, when it will be made available to the Marines for the extra day.”

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Posted in * Economics, Politics, Defense, National Security, Military, Foreign Relations, Military / Armed Forces, Politics in General, Science & Technology, The U.S. Government

(WSJ) Medicare Paid Insurers Billions for Questionable Home Diagnoses, Watchdog Finds

Private Medicare insurers got about $4.2 billion in extra federal payments in 2023 for diagnoses from home visits the companies initiated, even though they led to no treatment, a new inspector general’s report says.

The extra payments were triggered by diagnoses documented based on the visits, including potentially inaccurate ones, for which patients received no other medical services, the report says. Insurers offering private plans under Medicare, known as Medicare Advantage, are paid more when patients have costly conditions.

Each visit was worth $1,869 on average to the insurers, according to the Office of Inspector General for the Department of Health and Human Services. The findings are similar to those of a Wall Street Journal investigation published in August. It showed that insurers between 2019 and 2021 pocketed an average of $1,818 for each visit based on diagnoses for which people received no other treatment.

The OIG recommended in Thursday’s report for the first time that Medicare restrict or even cut off payments for diagnoses from these visits. 

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Posted in * Economics, Politics, Corporations/Corporate Life, Economy, Ethics / Moral Theology, Health & Medicine, Medicare

(Bloomberg) Global Public Debt to Hit $100 Trillion by End of 2024, IMF Says

Global public debt is set to reach $100 trillion, or 93% of global gross domestic product, by the end of this year, driven by the US and China, according to new analysis by the International Monetary Fund.

In its latest Fiscal Monitor — an overview of global public finance developments — the IMF said it expects debt to approach 100% of GDP by 2030, and it warns that governments will need to make tough decisions to stabilize borrowing.

Debt is tipped to increase in the US, Brazil, France, Italy, South Africa and UK, according to the IMF report, which urges governments to rein in debt.

“Waiting is risky: country experiences show that high debt can trigger adverse market reactions and constrains room for budgetary maneuver in the face of negative shocks,” it said.

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Posted in * Economics, Politics, Economy, Ethics / Moral Theology, Politics in General, The National Deficit

(Telegraph) Ambrose Evans-Pritchard–Enjoy the torrid Fed rally, but the world is not out of the woods yet

The start of a Fed rate-cutting cycle is a huge moment for the international financial system. Central banks in emerging markets can loosen a little without fearing a run on their currencies. Indonesia’s central bank has stopped defending the rupiah and dared to cut rates. India’s Sensex stock index hit an all-time high on Thursday as markets anticipate a new world of abundant liquidity and surging inflows of foreign funds.

The Fed’s jumbo half-point cut is transmitted instantly to the 40-odd countries and currency boards linked to the US dollar in one way or another. These regions were forced to import the most aggressive tightening cycle in 40 years through their exchange rates, whether or not their local economies were synchronised with the US cycle….

But there is a large caveat to this rosy global picture. It all depends on whether the Fed is ahead of the curve and delivers a soft landing; or whether it is behind the curve, has misjudged the delayed effects of past tightening, and has already let recessionary dynamics take hold.

These binary outcomes can have drastically different consequences for the world.

Mislav Matejka, equity strategist at JP Morgan, says there have been four soft landings and eight recessions in the last 12 Fed cycles. The “softs” delivered stock market gains of 20pc or so over the following year. The “hards” led to months of sell-offs, snowballing into wipeout crashes in 2001 and 2008. This time the starting point is stretched after a 26pc rise in Wall Street’s S&P 500 index over the last year.

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Posted in Economy, Federal Reserve

(DW) FBI disrupts major Chinese hacking group, director says

The FBI said on Wednesday that it had disrupted a Chinese hacking group nicknamed “Flax Typhoon”  that targeted critical infrastructure in the United States.

The Flax Typhoon hackers installed malicious software on thousands of computers and other internet-connected devices including cameras, video recorders and routers.

This created a botnet — a massive network of infected computers.

Universities, government agencies, telecommunications providers, media organizations and NGOs were among the targets, the FBI said.

“Flax Typhoon’s actions caused real harm to its victims, who had to devote precious time to clean up the mess when they discovered the malware,” said FBI director Chris Wray.

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Posted in Foreign Relations, Politics in General, Science & Technology, The U.S. Government

(CRFB) CBO Releases June 2024 Baseline Update

The Congressional Budget Office (CBO)…[recently] released new ten-year budget and economic projections – an update from its February baseline – again confirming that the national debt is on an unsustainable path. According to CBO’s new projections:

Debt held by the public will reach a new record by the end of Fiscal Year (FY) 2027 – 106.2 percent of GDP – and rise to 122.4 percent of GDP by the end of 2034.

The budget deficit will rise to $1.9 trillion (6.7 percent of GDP) in FY 2024 and $2.9 trillion (6.9 percent of GDP) by 2034, totaling $22.1 trillion over the 2025-2034 budget window.

Interest costs will reach a near-record 3.1 percent of GDP this year – exceeding defense and Medicare spending – set a new record next year and grow to 4.1 percent of GDP by FY 2034.

Under CBO’s latest baseline, federal debt held by the public will grow by $23 trillion through FY 2034, from over $27 trillion today to nearly $51 trillion by the end of 2034. As a share of the economy, debt will rise from 97.3 percent of Gross Domestic Product (GDP) at the end of 2023 to 106.2 percent by 2027 – surpassing the prior record set just after World War II – and 122.4 percent of GDP by 2034. Debt in 2034 will be $2.4 trillion and 6.4 percent of GDP higher than projected in February.

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Posted in * Economics, Politics, Budget, Defense, National Security, Military, Economy, Ethics / Moral Theology, History, Medicare, Social Security, The National Deficit, The U.S. Government

(NPR) Couples say they can’t get married because of this government program’s outdated rules

Amber and Devin Weise lived in distant states when they met in an online social media group for Christian singles. They quickly became a couple, spending hours texting or talking on video chat. After several months of long-distance dating Devin wanted to propose, but thought it was proper and more romantic to do it in person.

Amber hinted she’d be OK with a proposal on a video call. Devin proposed and sent the ring in the mail.

It wasn’t until after they married that they learned the federal disability benefits program Amber relied upon penalizes couples who marry. Amber lost her monthly income check and the health care that came with it.

Amber is one of 7.4 million people who rely upon Supplemental Security Income, or SSI, a federal program that provides monthly cash assistance to disabled and older people with little income and resources. And for Amber and others, being on SSI is also the way they get health insurance.

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Posted in Marriage & Family, Personal Finance & Investing, The U.S. Government

(The FP) Niall Ferguson: Could we be living in the late Soviet America?

Even more striking to me are the political, social, and cultural resemblances I detect between the U.S. and the USSR. Gerontocratic leadership was one of the hallmarks of late Soviet leadership, personified by the senility of Leonid Brezhnev, Yuri Andropov, and Konstantin Chernenko. 

But by current American standards, the later Soviet leaders were not old men. Brezhnev was 75 when he died in 1982, but he had suffered his first major stroke seven years before. Andropov was only 68 when he succeeded Brezhnev, but he suffered total kidney failure just a few months after taking over. Chernenko was 72 when he came to power. He was already a hopeless invalid, suffering from emphysema, heart failure, bronchitis, pleurisy, and pneumonia.

It is a reflection of the quality of healthcare enjoyed by their American counterparts today that they are both older and healthier. Nevertheless, Joe Biden (81) and Donald Trump (78) are hardly men in the first flush of youth and vitality, as The Wall Street Journal recently made cringe-inducingly clear. The former cannot distinguish between his two Hispanic cabinet secretaries, Alejandro Mayorkas and Xavier Becerra. The latter muddles up Nikki Haley and Nancy Pelosi. If Kamala Harris has never watched The Death of Stalin, it’s not too late.

Another notable feature of late Soviet life was total public cynicism about nearly all institutions. Leon Aron’s brilliant book Roads to the Temple shows just how wretched life in the 1980s had become.

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Posted in * Culture-Watch, * Economics, Politics, America/U.S.A., Budget, Ethics / Moral Theology, History, Russia, The National Deficit, The U.S. Government

(NYT Op-ed) Bret Stephens–How Capitalism Went Off the Rails

The Group of 7 countries might have set a record when they met in Italy last week. Has there ever been a less popular assemblage of leaders of the free world? Approval ratings ranged from Giorgia Meloni of Italy’s about 40 percent to Emmanuel Macron of France’s 21 percent to Fumio Kishida of Japan’s 13 percent. Last year the Edelman Trust Barometer found that only 20 percent of people in the G7 countries thought that they and their families would be better off in five years. Another Edelman survey, from 2020, uncovered a broad distrust of capitalism in countries across the world, “driven by a growing sense of inequity and unfairness in the system.”

Why the broad dissatisfaction with an economic system that is supposed to offer unsurpassed prosperity? Ruchir Sharma, the chairman of Rockefeller International and a Financial Times columnist, has an answer that boils down to two words: easy money. In an eye-opening new book, “What Went Wrong With Capitalism,” he makes a convincing case.

“When the price of borrowing money is zero,” Sharma told me this week, “the price of everything else goes bonkers.” To take just one example: In 2010, as the era of ultralow and even negative interest rates was getting started, the median sale price for a house in the United States hovered around $220,000. By the start of this year, it was more than $420,000.

Nowhere has inflation (in the broad sense of the term) been more evident than in global financial markets. In 1980 they were worth a total of $12 trillion — equal to the size of the global economy at the time. After the pandemic, Sharma noted, those markets were worth $390 trillion, or around four times the world’s total gross domestic product.

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Posted in * Economics, Politics, Budget, Economy, Federal Reserve, Politics in General, The U.S. Government

(NYT) In about 10 months, Pentagon Opens a new Ammunition Factory in Texas to Keep Arms Flowing to Ukraine

To keep Ukraine’s artillery crews supplied, the Pentagon set a production target last year of 100,000 shells per month by the end of 2025. Factories in Scranton and Wilkes-Barre, Pa., together make about 36,000 shells per month. The new General Dynamics facility in Mesquite, Texas, will make 30,000 each month once it reaches its full capacity.

The 100,000-per-month goal represents a nearly tenfold increase in production from a few years ago.

An Ohio-based defense firm called IMT is expected to make up the difference.

Less than a year ago, the surrounding area here in North Texas was just a dirt field. But with millions of dollars from Congress and help from Repkon, the American defense firm General Dynamics was able to open the factory about 10 months after breaking ground.

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Posted in * Economics, Politics, Corporations/Corporate Life, Economy, Military / Armed Forces, The U.S. Government, Ukraine

(WSJ) One of the Biggest Hospital Failures in Decades Raises Concerns for Patient Care

Hospitals in eight states are at risk of running out of cash after their owner filed for bankruptcy, potentially pitting the chain’s creditors against regulators, who raced to address concerns about safety.

Steward Health Care System became one of the largest hospital bankruptcies in decades when it filed for chapter 11 early Monday. The chain, which operates 30 hospitals, has been in dire financial straits for months, failing to pay bills and burning through emergency loans.

State regulators are worried about Steward, whose physicians provide care for 2.2 million patients a year. In one Steward hospital, bats prompted the evacuation of an intensive-care unit. At others, traveling nurses left after not being paid, and executives have swapped equipment to fill gaps.

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Posted in * Economics, Politics, Economy, Health & Medicine, Law & Legal Issues, The U.S. Government

(CRFB) Social Security and Medicare Trustees Release 2024 Reports

The Social Security and Medicare Trustees just released their annual reports on the financial status of the Social Security and Medicare programs. The Trustees project that both the Social Security and Medicare trust funds are within 12 years of insolvency and in need of trust fund solutions. Specifically, they project the Social Security Old Age and Survivors Insurance (OASI) trust fund will run out of reserves in 2033, the Medicare Hospital Insurance (HI) trust fund will become insolvent by 2036, and the Social Security Disability Insurance (SSDI) trust fund will remain solvent over the 75-year projection window. Assuming revenue is reallocated in the years between OASI and SSDI insolvency, the theoretically combined Social Security trust funds will be insolvent by 2035.

In other words, Social Security’s retirement trust fund will reach insolvency when today’s 58-year-olds reach the normal retirement age and today’s youngest retirees turn 71. At that point, all beneficiaries will face a 21 percent across-the-board benefit cut. On theoretically combined basis, all beneficiaries will face a 17 percent cut in 2035. Over the full 75-year projection window, Social Security’s combined funds faces an actuarial imbalance of 3.50 percent of taxable payroll, which is the equivalent of 1.2 percent of Gross Domestic Product (GDP) or 20 percent of all future benefits.

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Posted in * Economics, Politics, Aging / the Elderly, America/U.S.A., Budget, Economy, Ethics / Moral Theology, House of Representatives, Medicare, Personal Finance, Politics in General, President Joe Biden, Senate, Social Security, The U.S. Government

(Economist) America’s fiscal outlook is disastrous, but forgotten

It was not so long ago that the hottest topic in American politics was the ballooning national debt. In 1992 Ross Perot had the best showing for a third-party candidate in a presidential election since 1912 on a platform of fiscal probity. Two years later the Republicans seized control of Congress for the first time in 40 years, with the first item in their “Contract with America” being a pledge to balance the budget. Bill Clinton easily won re-election two years after that, in part by negotiating spending cuts with Republicans that led to America’s first surpluses in a generation.

At the start of this fiscal hullabaloo, in 1992, America’s net debt amounted to 46% of gdp. Today it has reached 96% of gdp. For the past five years, under first Donald Trump and then Joe Biden, the federal deficit has averaged 9% of gdp a year. The International Monetary Fund says that America’s borrowing is so vast it is endangering global financial stability. s&p and Fitch, two credit-rating agencies, have already downgraded America’s debt; a third, Moody’s, is threatening to.

Yet concern about deficits and debt has all but vanished from American politics. Voters seem relaxed about the subject, which barely registers in pollsters’ tallies of the biggest problems facing the country. Although Messrs Biden and Trump both tut-tut about the dire fiscal outlook from time to time, neither has made improving it a centrepiece of his campaign. On the contrary, both would in all likelihood add to America’s debts, by spending more in Mr Biden’s case and by taxing less in Mr Trump’s. Neither candidate dares breathe a word about trimming spending on health care and pensions for the elderly, which account for the biggest share of the federal budget and are set to grow still bigger as the population ages. Yet a fiscal reckoning is coming, whether the candidates admit it or not—and given the politicians’ denial, it may take an unexpected form.

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Posted in America/U.S.A., Budget, City Government, Ethics / Moral Theology, Office of the President, Politics in General, President Joe Biden, Senate, The National Deficit, The U.S. Government

(Economist) What to make of China’s massive cyber-espionage campaign

Mark Kelly of Recorded Future, a cyber-security firm, says his company is aware of about 50 hacking groups in China, including private firms working for the mss or People’s Liberation Army. There are undoubtedly many more. Mr Kelly describes China’s cyber-espionage efforts as “orders of magnitude” greater in scale than those mounted by Russia or North Korea.

As the indictment shows, they are surprisingly devolved. Some of them specialise in spying on different parts of the world, says Nigel Inkster, a former deputy head of Britain’s spy agency, mi6. They have considerable leeway to do as they wish, he says: “I’m not even sure that there is any kind of formal political clearance mechanism.” Much of their work is subcontracted to private firms. Last month a huge online dump of documents from one such company, i-Soon, showed its involvement in large-scale cyber-snooping on behalf of a variety of government agencies.

The West’s anxieties, not least about the hackers’ theft of corporate data, are becoming increasingly manifest. In January the head of the fbi, Christopher Wray, said that China’s state-sponsored hackers outnumbered his agency’s cyber-personnel by “at least 50 to one”. He added that China’s hackers are laying the groundwork for a possible Chinese strike, “positioning on American infrastructure in preparation to wreak havoc and cause real-world harm to American citizens and communities.”

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Posted in China, Corporations/Corporate Life, Ethics / Moral Theology, Foreign Relations, Politics in General, Science & Technology, The U.S. Government

(FT) US faces Liz Truss-style market shock as debt soars, warns watchdog

The US faces a Liz Truss-style market shock if the government ignores the country’s ballooning federal debt, the head of Congress’s independent fiscal watchdog has warned.

Phillip Swagel, director of the Congressional Budget Office, said the mounting US fiscal burden was on an “unprecedented” trajectory, risking a crisis of the kind that sparked a run on the pound and the collapse of Truss’s government in the UK in 2022.

“The danger, of course, is what the UK faced with former prime minister Truss, where policymakers tried to take an action, and then there’s a market reaction to that action,” Swagel said in an interview with the Financial Times.

The US was “not there yet”, he said, but as higher interest rates raise the cost of paying its creditors to $1tn in 2026, bond markets could “snap back”.

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Posted in * Economics, Politics, America/U.S.A., Budget, Credit Markets, Economy, The National Deficit, The U.S. Government

(WSJ) Young adults are more skeptical of government and pessimistic about the future than any living generation before them

Kali Gaddie was a college senior when the pandemic abruptly upended her life plans—and made her part of a big and deeply unhappy political force that figures to play a huge role in the 2024 election season.

Her graduation was postponed, she was let go from her college job and her summer internship got canceled. She spent the final months of school taking online classes from her parents’ house. “You would think that there’s a plan B or a safety net,” she said. “But there’s actually not.”

Today, Gaddie, 25, works as an office manager in Atlanta earning less than $35,000 a year. In her spare time, she uploads videos to TikTok, where she’s amassed thousands of followers. Now, that’s at risk of being taken away too. All of this has left her dejected and increasingly skeptical of politicians.

Young adults in Generation Z—those born in 1997 or after—have emerged from the pandemic feeling more disillusioned than any living generation before them, according to long-running surveys and interviews with dozens of young people around the country. They worry they’ll never make enough money to attain the security previous generations have achieved, citing their delayed launch into adulthood, an impenetrable housing market and loads of student debt.

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Posted in * Culture-Watch, America/U.S.A., Anthropology, History, Politics in General, Psychology, The U.S. Government, Uncategorized, Young Adults

(Bloomberg) Professor Ken Rogoff Says Biden, Trump Favor ‘Blowing Up’ US Debt

Harvard University economics professor Kenneth Rogoff said both President Joe Biden and his predecessor and challenger Donald Trump risk sending US debt levels into dangerous territory as Washington fails to grasp that the era of ultra-low interest rates won’t come back.

“Washington in general has a very relaxed attitude towards debt that I think they’re going to be sorry about,” Rogoff said on Bloomberg Television’s Wall Street Week with David Westin. “It’s just not the free lunch that Congress and perhaps the two presidential candidates have gotten used to.”

While an exact “upper limit” for the federal debt cannot be known — it’s estimated by the Congressional Budget Office to climb to 116% of US gross domestic product by 2034 from 99% today — Rogoff warned that there will be challenges as the level increases.

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Posted in Budget, Ethics / Moral Theology, House of Representatives, Office of the President, Politics in General, Senate, The National Deficit, The U.S. Government

The Annual Threat Assessment of the US Intelligence Community offers a sobering analysis of what likely awaits us

During the next year, the United States faces an increasingly fragile global order strained by accelerating strategic competition among major powers, more intense and unpredictable transnational challenges, and multiple regional conflicts with far-reaching implications. An ambitious but anxious China, a confrontational Russia, some regional powers, such as Iran, and more capable non-state actors are challenging longstanding rules of the international system as well as U.S. primacy within it. Simultaneously, new technologies, fragilities in the public health sector, and environmental changes are more frequent, often have global impact and are harder to forecast…The world that emerges from this tumultuous period will be shaped by whoever offers the most persuasive arguments for how the world should be governed, how societies should be organized, and which systems are most effective at advancing economic growth and providing benefits for more people.

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Posted in America/U.S.A., Foreign Relations, Globalization, Politics in General, Science & Technology, The U.S. Government

(CNBC) The U.S. national debt is rising by $1 trillion about every 100 days

The debt load of the U.S. is growing at a quicker clip in recent months, increasing about $1 trillion nearly every 100 days.

The nation’s debt permanently crossed over to $34 trillion on Jan. 4, after briefly crossing the mark on Dec. 29, according to data from the U.S. Department of the Treasury. It reached $33 trillion on Sept. 15, 2023, and $32 trillion on June 15, 2023, hitting this accelerated pace. Before that, the $1 trillion move higher from $31 trillion took about eight months.

U.S. debt, which is the amount of money the federal government borrows to cover operating expenses, now stands at nearly $34.4 trillion, as of Wednesday. Bank of America investment strategist Michael Hartnett believes the 100-day pattern will remain intact with the move from $34 trillion to $35 trillion.

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Posted in * Economics, Politics, America/U.S.A., Economy, Ethics / Moral Theology, Politics in General, The National Deficit, The U.S. Government

(NYT) America’s Fiscal Gap continues to Increase to Troublesome Levels Going Forward

Spending on safety net programs such as Social Security and Medicare continues to grow even as their trust funds face the prospect of being depleted in the next 10 years.

“Also boosting deficits are two underlying trends: the aging of the population and growth in federal health care costs per beneficiary,” Mr. Swagel said. “Those trends put upward pressure on mandatory spending.”

The national debt is likely to be even larger than the budget office is predicting, as its forecast assumes that the 2017 tax cuts that Republicans enacted will fully expire even though lawmakers are already considering extending many of the measures, including lower individual income tax brackets.

For the second time in less than a year, the budget office said it now expected Mr. Biden’s efforts to wean the nation from fossil fuels to be more popular with the public — and more expensive for taxpayers — than initially estimated.

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Posted in Economy, Ethics / Moral Theology, House of Representatives, Medicare, Office of the President, Politics in General, Senate, Social Security, The National Deficit, The U.S. Government

(Bloomberg) Nassim Taleb Says US Faces a ‘Death Spiral’ of Swelling Debt

Black Swan author Nassim Nicholas Taleb said the US deficit is swelling to a point that it would take a miracle to reverse the damage.

“So long as you have Congress keep extending the debt limit and doing deals because they’re afraid of the consequences of doing the right thing, that’s the political structure of the political system, eventually you’re going to have a debt spiral,” he said Monday night at an event for Universa Investments, the hedge fund firm he advises. “And a debt spiral is like a death spiral.”

Taleb defined the ballooning debt load as a “white swan,” a risk that’s more probable than a surprise “black swan” event. While he didn’t identify specific outcomes in markets, he did say white swans include both the US deficit and an economy that’s far more vulnerable to shocks than in prior years.

The reason for that, he said, is that the world is far more interconnected due to globalization, with issues in one region able to ricochet around the world.

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Posted in * Economics, Politics, Budget, Economy, Ethics / Moral Theology, House of Representatives, Medicare, Office of the President, Politics in General, Senate, Social Security, The National Deficit, The U.S. Government