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The post CBO sees record-shattering spending, debt appeared first on Virus Reports.
]]>The federal government will shatter the record for spending and deficits this year, ending at $3.3 trillion in the hole, the Congressional Budget Office said Wednesday, painting a grim picture of Uncle Sam’s finances.
Powered by generous aid to combat the COVID-19 pandemic, federal spending will roughly equal a third the size of the U.S. economy. Combined with state and local spending, that puts the U.S. on par with some of Northern Europe’s most expansionist governments in terms of public spending.
“The pandemic and legislation enacted in response to it have caused the deficit to surge in the past few months,” CBO said in the new update.
CBO predicted spending will snap back to its pre-pandemic trend line within a few years, but some lasting damage will be done. Federal debt held by the public, which will reach nearly 100% of gross domestic product by the end of this year, and will cross that ignominious threshold next year.
And by 2023 debt will set all-time records, topping even the levels seen in the aftermath of World War II.
By the end of this decade, debt will have doubled from less than $15 trillion in 2019 to more than $31 trillion in 2030.
All told, federal spending this year will reach $6.6 trillion. That’s $2.2 trillion more than last year.
On the other side of the ledger, revenue will drop about 5%, or $167 billion, as individuals and companies see their incomes — and therefore their tax bills — cut.
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]]>The post Club for Growth spending $5 million on anti-Biden ad campaign appeared first on Virus Reports.
]]>The conservative Club for Growth said Thursday it will spend $5 million on ads attacking presumptive Democratic presidential nominee Joseph R. Biden in Arizona, Pennsylvania and Wisconsin.
The economic conservative group’s ads are education-focused and portray a contrast between Mr. Biden’s public education goals with President Trump’s agenda. The Club’s new ads will debut Monday across broadcast, cable and digital platforms.
“Even with hundreds of schools closing independently, Biden opposes emergency parental choice grants, preventing parents from choosing options like private tutoring or charter schools if their public school is closed,” a narrator says in the 30-second ad. “A lost year is unacceptable, but four under Biden? That’s a lost generation.”
The Biden campaign’s education plans include more money and benefits for educators, adding health professionals in schools, and spending more on public education in poor and in non-White districts, according to details of Mr. Biden’s plans posted on his website in May.
Ripping Mr. Biden’s plans for education is an uncommon target for the Club, which has traditionally focused on supply-side economic issues. In 2020, however, the Club has prioritized hammering critics of Mr. Trump including by running ads critical of actions by Sen. Mitt Romney, Utah Republican, and House Democrats over the impeachment of Mr. Trump.
The Biden campaign did not immediately respond to request for comment.
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]]>The post Mick Mulvaney: We need to get spending under control moving forward appeared first on Virus Reports.
]]>Mick Mulvaney, the former acting White House chief of staff, said Tuesday the country might have overreacted a bit to the coronavirus pandemic and that it’s time to allow people to get back to work safely.
“I think we’ve sort of lost perspective on this a little bit. … We’ve overreacted a little bit,” Mr. Mulvaney said on CNBC.
He said he would absolutely feel comfortable flying on an airplane in the middle seat right now if he and his fellow passengers were wearing protective masks.
He pointed out that a year and a half or two years ago, “someplace just shy of” 100,000 people died from the ordinary flu — a figure the U.S. is approaching in terms of coronavirus-related deaths.
“That’s not to say that COVID is the ordinary flu — that’s not my point,” he said. “The country didn’t shut down — it’s time to sort of deal with this in the proper perspective and that’s to allow us to get back to work safely.”
In March, President Trump announced Mr. Mulvaney would be the new U.S. special envoy to Northern Ireland. Mr. Trump had announced Mr. Mulvaney as his acting chief of staff in December 2018.
Mark Meadows is the current White House chief of staff.
Mr. Mulvaney also said lawmakers need to find a way to rein in federal spending moving forward after Congress has signed off on close to $3 trillion worth of rescue legislation to respond to the pandemic.
“We need to figure out a way to hard-wire into whatever comes next a way to reduce the size of the bureaucracy, reduce the size of the regulatory state, prevent the increase of taxes, and get a way for spending to get under control moving forward,” Mr. Mulvaney said.
“[Because] you’re not going to do it right now,” he said.
He said a big risk in the rescue packages is that people are losing perspective on what government costs.
“We’re at risk of training people to believe that government is free,” he said. “When you spend 2 or 3 or 8 trillion dollars, there’s going to be a cost to that at some point. It’s not free.”
Senate Republicans have cited ballooning federal spending as one reason to take a pause on coronavirus legislation and see how the trillions of dollars affect the U.S. economy.
As a former director of the White House budget office under Mr. Trump, Mr. Mulvaney had also been tasked with trekking to Capitol Hill to defend the president’s annual budget blueprints to skeptical lawmakers.
Mr. Trump has repeatedly vowed to protect federal entitlement programs such as Social Security and Medicare, which budget analysts across the political spectrum cite as the key drivers of federal deficits and debt.
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]]>The post DC on spending binge with no plan to cut back, as debt held by public to top GDP by year’s end appeared first on Virus Reports.
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Congressional budget scorekeepers sounded the alarm Friday just as President Trump signed another multibillion-dollar coronavirus response bill, reporting in a new projection that the federal budget deficit will hit a stunning $3.7 trillion in fiscal 2020, and debt held by the public is projected to surpass GDP by year’s end.
This comes as Washington — unlike the private sector — has shown no inclination to tighten its belt as the economic impact from coronavirus lockdowns has put more than 26 million Americans out of work.
CORONAVIRUS: WHAT TO KNOW
The Congressional Budget Office projection found that for fiscal 2020, the budget deficit will be $3.7 trillion and federal debt held by the public will be 101 percent of GDP by the end of the fiscal year. The deficit projection is more than double the $1.4 trillion budget deficit the U.S. racked up in 2009, the highest one-year federal deficit in terms of gross dollars in U.S. history.
Meanwhile, inflation-adjusted GDP will decline by 12 percent during the second quarter of 2020, equivalent to an annual decline of 40 percent, while the unemployment rate will average close to 14 percent.
But as countless businesses have been shuttered or otherwise impacted — resulting in furloughs, pay cuts and layoffs — there have been few calls to cut congressional salaries or make other cuts to federal agency budgets (though some senators suggested halting their own pay until rescue packages were approved).
Instead, the spending wheels have been spinning. Trump signed a $484 billion, “Phase 3.5” emergency interim package that replenishes a fund for small businesses and adds billions of dollars in aid to hospitals across the country.
That’s in addition to the first two coronavirus response bills worth $200 billion, and a $2.2 trillion stimulus package to boost the freefalling U.S. economy and get much-needed relief to struggling families and businesses.
Some of the money in the coronavirus response legislation comes in the form of loans that could be paid back, though many could also be forgiven under the terms of the program. Additionally, the stimulus measures are aimed at preventing an economic collapse resulting from the social distancing measures and forced closures meant to reduce the spread of the coronavirus — a scenario that would contribute to the growth of the federal deficit due to lost revenues.
The historic pace of spending — and Washington’s aversion to curbing the exploding debt during the boom that preceded this crisis — has left fiscal hawks horrified.
“It’s one thing to run a deficit during a pandemic, but Washington’s long-term debt habit is suicidal,” Sen. Ben Sasse, R-Neb., said in a statement Friday. “For decades, Republicans and Democrats spent money we don’t have at a rate our kids can’t afford. Republicans and Democrats maxed out the credit cards during good times and now, when we’re in the middle of the coronavirus’ health and economic crises, we’re facing a bleak future.”
TRUMP SET TO PRESIDE OVER RECORD SPENDING, DEFICITS AS CORONAVIRUS COSTS EXPLODE
“None of this is sustainable,” he said. “If politicians continue to ignore the problem, this debt will crush our kids.”
“The gargantuan federal bailout that just passed over $2 trillion brings us closer and closer to a point of no return,” Sen. Rand Paul, R-Ky., said on the Senate floor last week. “A point at which the world loses confidence in the dollar. A point at which our debt becomes an existential threat to our security.”
Treasury Secretary Steven Mnuchin has said there is concern about the soaring deficits and debt.
“I think we’re all sensitive to [the fact] that this is a war and we need to win this war and we need to spend what it takes to win the war,” Mnuchin said on Fox Business Network Wednesday. “On the other hand, we are sensitive to the economic impacts of putting on debt, and that’s something that the president is reviewing with us very carefully.”
But so far, there has been no sign of any pending efforts to curb that spending, at least in the short-term. Already on the Hill there has been talk of a Phase 4 package should the economic downturn continue — which seems likely. The price tag on that could be another $1 trillion or more.
Some on the left, such as Rep. Alexandria Ocasio-Cortez, D-N.Y., have suggested Trump tax cuts could be rolled back and taxes on Amazon and Facebook increased.
“Happy to offer solutions to deficit hawks’ selectively-applied concern trolling,” she tweeted.
But at a time of economic downturn, it would seem unlikely that a tax increase would gain much traction.
On the question of a phase 4 relief bill, Senate Majority Leader Mitch McConnell, R-Ky., has said that he wants the Senate to proceed “cautiously,” citing concerns about the national debt.
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“You’ve seen the talk from both sides about acting, but my goal from the beginning of this, given the extraordinary numbers that we’re racking up to the national debt, is that we need to be as cautious as we can be,” McConnell told Politico.
He also said that he would rather see the economy re-open than create another hole in the deficit with more stimulus.
“The economy is in freefall. It certainly underscores that,” he said. “The best way to get the economy back and running is to begin to open it up again, rather than passing immediately another bill where we have to borrow.”
Fox News’ Tyler Olson contributed to this report.
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]]>The post Americans are spending their coronavirus stimulus checks on food, gas and paying back friends appeared first on Virus Reports.
]]>Girl wearing mask and gloves in grocery store
Phynart Studio
New data shows the government’s coronavirus stimulus checks are providing much-needed relief to Americans struggling with day-to-day living costs.
Data compiled by digital bank Current found members who received stimulus payments over the past five days spent 16% of the money on food, including takeout and delivery. An additional 9% of spending was on groceries and 10% went toward gas.
“Clearly food is an issue, people are struggling,” Current CEO Stuart Sopp told CNBC. “They’re just trying to survive, and I think that’s what the stimulus was all about.”
The figures give an early glimpse at how Americans will use cash transfers from the government as the coronavirus pandemic has shut down businesses and left millions unemployed.
The CARES Act, which was passed by Congress at the end of March, provided one-time cash transfers of up to $1,200 to individuals to assist with the economic fallout of the pandemic. The Treasury Department said this week that tens of millions of Americans will receive payments via direct deposit by Wednesday.
Most traditional banks will start depositing the checks from the IRS into customers’ accounts this week, but some fintech start-ups have been able to accelerate the payments.
“Instead of waiting, we used our own money, our balance sheets to go and credit those customers as soon as possible,” Sopp said. “We’ll accept the credit risk of the Treasury and IRS, at least for now.”
Current said that, as of Friday, it had credited 16,595 of its members’ accounts with the stimulus payments. Roughy 45% of the money has already been spent, and Sopp said he expects it will all be spent in a matter of weeks.
In addition to food, groceries and gas, Current members spent 14% of the money on transfers to other users on the platform. The company said some users might have borrowed money from others while in need and are now paying them back.
“We saw a lot of people paying their friends and family back,” Sopp said. “Most of that stimulus was already prespent effectively living in between, waiting for that government check to hit the bank account.”
Current, which launched personal checking account products last year, said it has 900,000 members.
— CNBC’s Hugh Son contributed reporting
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