Washington Spends $2 For Every $1 in Taxes

[00:00:00]Washington now spends $2 for every one it collects as in taxes would have to double to cover what Congress already spends.

[00:00:10]Perhaps it is time for Washington to cut costs. The DC credit card statement arrived last week courtesy of Treasury who tallied $628 billion out the door in May compared to just $335 billion collected.

[00:00:25]That is a $293 billion hole in a single month, three and a half trillion dollars annualized.

[00:00:33]Now, a deficit this big, 7% of GDP, have happened before in American history, for example, World War II.

[00:00:40]What's never happened is 7% deficit when unemployment's low, the stock market is hitting highs, and with nothing resembling total war, nobody is rationing rubber. In other words, we are running emergency room deficits on a regular Tuesday, and that matters because eventually we will get a recession because it's what the Fed does for a living. When that happens, the average recession now blows out the deficit by an additional So, six on top of the seven we've got gets into silly town. So, where did it go wrong? In short, FDR and then Richard Nixon killed the gold standard that used to limit government borrowing, meaning now every crisis, every problem is a ratchet that makes spending go up, and it never comes down. To illustrate, in COVID they rubber-stamped welfare, and now six years later social spending is still two trillion above pre-COVID, a full trillion even accounting for inflation. Military spending keeps going whether or not we have any wars worth fighting, green subsidies, crony infrastructure bills, NGO slush funds, Washington breeds mouths to feed. Now, we had the perfect storm with Dodge and unified Republican control, including a GOP Congress who had spent 50 years promising lower spending. Instead, they hiked spending.

[00:02:04]But to be fair, they hiked only a tenth of what Dems were promising.

[00:02:09]But if the perfect storm cannot make a dent, that leaves one last hope grow out of it. Get economic growth fast enough that we can outrun the deficit. Now, it's sound in principle and Treasury Secretary Bessant has been pushing it.

[00:02:22]The problem is if you're running a 7% deficit, you've got to grow 8%. Toss in the occasional recession and you need closer to 10%.

[00:02:32]That is China level in its very best days. Now, it's possible to grow 10%. We did it in the 1800s when we had no income tax, a tiny regulatory code, and a tiny federal government to go with it.

[00:02:45]But today, we would need a miracle.

[00:02:47]Predict market call she's got us pegged under half that through 2030 and that's with AI. So, as Sense brought to you by the Bitcoin way, when you see a crisis coming, there's two options. Start preparing today or let it hit and then fix it when minds are concentrated. Washington is, of course, going to let it hit. Faster growth will buy us time. Republicans versus Democrats might buy us a little more time. But spend twice what you make and the music eventually runs out. And when it does, you'll see it first in bond markets, yields in the double digits which freezes the economy, crashes Wall Street, and crashes pensions. And then you'll see the Fed parachute in to convert it into inflation at which point anybody holding dollars or buying groceries gets wiped out while the rich who own hard assets, houses, stocks, hedges like Bitcoin or gold get to inherit the rest of the economy courtesy of the Federal Reserve and the federal spending it feeds like an addict. Read the rest with charts and all the gory details at procsenose.com. Okay, we'll be watching.

[00:03:50]See you next time.