In Q1 2018, U.S. Borrows Record $488 Billion Due To Trump's Tax Cuts

Michael Vadon/CC BY 2.0/Flickr

The CBO estimates the budget gap will reach $804 billion by the end of the fiscal year and surpass $1 trillion by 2020.

Bloomberg News reports that U.S. borrowing for the first quarter hit $488 billion, about $47 billion more than previously estimated and a record for the period.

U.S. Treasury Secretary Steven Mnuchin said he’s unconcerned about the bond market’s ability to absorb rising government debt after his department said it borrowed a record amount for the first quarter.

“It’s a very large, robust market -- it’s the most liquid market in the world, and there is a lot of supply,” he said in a Bloomberg TV interview on Monday. “But I think the market can easily handle it.”

Mnuchin also indicated he is unconcerned about demand for Treasuries, saying “by definition supply and demand will equate” and that there are still plenty of buyers.

The U.S.’s need to issue more Treasuries is expected to grow as the fiscal picture deteriorates. The budget deficit widened to $600 billion halfway through the fiscal year, as spending increased at three times the pace of revenue growth in the October-to-March period, according to Treasury figures released earlier this month.

President Donald Trump’s tax cuts combined with the spending bill approved earlier this year will result in a budget gap of $804 billion this fiscal year, according to the Congressional Budget Office.

The CBO also estimates the gap will blow past $1 trillion by 2020.

In an accompanying statement about the state of the economy, the Treasury said Monday that tax changes are “poised to underpin near-term consumption and investment” and “the stage is set for a pick-up in growth over the near term.”

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The US Treasury offered $488 billion in very low paying savings instruments and various investors took $488 billion from their cash reserves to buy them. Money moved from checking to savings and will stay out of circulation until the instruments mature. The monopoly issuer of the currency actually cannot "borrow" its own currency. but that is complex,. It certainly cannot "create" currency by borrowing existing currency and if creating currency is the goal it only needs to create it, not borrow it.

In a low inflation environment in the economy and a need for job creation and wage support, a tax cut was exactly what was called for. The distribution of benefit from that cut can be argued with validity, but not the tax cut. The national "debt" is grossly misnamed and is nothing more than an accurate accounting of currency in the economy that hasn't yet been removed by taxation. It is not an obligation of taxpayers. Neither taxes nor borrowing "fund" government spending, and only serve to draw down currency levels, primarily for inflation control. The US dollar is a fiat currency that we can never run out of, but our leaders would like us to believe that we still function with a gold standard and that the rules that apply to our household budgeting also apply to the issuer of the currency.

This is how they control us when we decide we want nice things like other countries have. The idea that the issuer of the currency, that is mandated by the Constitution to create it for the "general welfare", has to go begging with hat in hand for rich people's money to "afford" to spend into the economy is totally absurd and should be rejected outright. We have had a debt for over 170 years and not one single "taxpayer" has paid a dime toward it. It was an accounting function to advise Congress when we were on the gold standard. The mandate to "match" deficit spending with bond issues was part of the Federal Reserve Act of 1913 as a way of allowing Congress to provision itself while also defending the gold reserve. It was retained when we left the gold standard in 1971 to allow the Fed leverage to control interest rates. It never did "fund" spending. Spending creates currency and taxation cancels currency, and bonds are a kinder, gentler form of temporary taxation for investors that sets a bottom for porfolios.


They are laughing At the morons who voted republican again


Where are all the old fat white people who screamed 🗣”THE DEFiCIT!” between buffet farts?