The $6 Trillion Pension Bailout Is Coming
The comments below are an edited and abridged synopsis of an article by Lance Roberts
President Trump has reached an agreement with Congress to pass a continuing resolution that will suspend the debt ceiling until July 2021. It will ‘only’ increase spending by $320 billion.
The US spent $986 billion more than it received in revenue in 2018. Adding the $320 billion to that number, there is now a $1.3 trillion deficit.
More importantly, federal tax revenue is declining. This was not supposed to be the case, as the whole corporate tax cut bill was supposed to lift tax revenues due to rising incomes.
More spending and less revenue equals bigger deficits, which equates to slower economic growth. Over the next 12 to 18 months, spending will expand, and the deficit will quickly approach $2 trillion.
Here’s the worst part: The projected budget deficits over the next couple of years are coming at the end of a decade-long growth cycle with the economy essentially at full employment. This is significant because, while budget deficits can be helpful in recessions by providing an economic stimulus, there are good reasons for retrenching during good economic times.
During the next recession, revenue will drop sharply, deficits will explode, and the US government will be forced into another round of bailouts. Congress is already committing Americans to pay for it.
Roberts discusses the $6 trillion bailout, and how America is out of time. It is, says Roberts, an unsolvable problem that will happen and that will devastate many Americans. It’s only a matter of time.
