US National Debt Spiraling Out of Control, New Record

1. Treasury Borrowing Hit Record $488 Billion in 1Q
2. Why Deficits Could be Worse Than the CBO’s Estimates
3. Trillion Dollar Deficits to Become the “New Normal”
4. When It Comes to Debt, US Stands Alone in Developed World

Treasury Borrowing Hit Record $488 Billion in 1Q

The Treasury Department announced last week that the government borrowed a record $488 billion in the January-March quarter. The Treasury said that actual borrowing in the 1Q exceeded the old record of $483 billion set in the first quarter of 2010 – the period when the country was struggling to pull out of a deep recession and prop-up the financial system following the 2008 financial crisis.

What makes the just passed quarter particularly troubling is that there was no crisis, no major alarming events and not even a recession. In fact, in the first quarter US GDP rose by 2.3% according to the Commerce Department amid what experts said was a global coordinated recovery.

President Trump’s tax cuts, the two-year budget deal that led to higher spending caps for this year and next and the $1.3 trillion fiscal 2018 omnibus spending bill are the main contributors to the worsening fiscal picture compared to last year. In addition, several rounds of supplemental appropriations for the relief efforts after three major hurricanes in 2017 have contributed to the bloated federal spending this year.

What is scary is how fast the US is ramping up federal debt. In the first six months of the fiscal year, October 2017-March 2018, the US budget deficit rose to $600 billion as spending increased at three times the pace of revenue growth. If that growth rate were to continue, the US deficit would soar to $1.2 trillion for FY2018.

Fortunately, the Treasury said it expects it will only need to borrow $75 billion in the current quarter. Still, the Congressional Budget Office forecasted in April that the budget deficit for FY2018 will hit $804 billion, up $241 billion from its previous estimate of $563 billion last year.