Inflation, Recession…Are You Ready?

No matter what your political persuasion, you might wonder whether our Congresspeople are fiscally irresponsible, financially oblivious, intentionally misleading or are just merely telegraphing their future plans.

In December they voted in H.R. 1, the Tax Reform Act, 2017.which reduced taxes a little for some, but a lot for others. There is now a big hole in Federal revenues.

Then they passed H.R. 1625: Consolidated Appropriations Act, 2018, which significantly increased expenses. Getting the picture? Revenues are down, expenses up.

According to the Washington Post the Congressional Budget Office reports, “America’s deficit is rising sharply and will surpass $1 trillion per year by 2020, a gap that has grown since Congress cut taxes and increased spending…”

Recently the International Monetary Fund was more pessimistic, “The U.S. debt-to-GDP ratio is projected widen to 116.9 percent by 2023…” That means our debt would be greater than everything our country produces in a year. That would be worse that than economic problem countries like Greece or Italy.

Robert Samuelson writes, “No one knows the consequences of these unprecedented peacetime deficits, but the CBO has listed some possibilities:

They may further raise interest rates, which would increase deficits, squeeze other federal programs and crowd out borrowing by businesses for factories, machinery, computers and buildings. This last effect could imperil living standards.Government might find it difficult to respond to national emergencies, whether war, natural disaster or a financial crisis, because more borrowing on top of today’s deficits would be harder.We could face a full-blown debt crisis. As CBO Director Keith Hall recently testified, “investors would become unwilling to finance the government’s borrowing unless they were compensated with very high interest rates.” That could trigger draconian spending cuts or tax increases — and a stiff recession.”

Inflation will also likely occur. Which would impact us all but especially the poor and those on fixed income. Today’s dollar would buy less in the future.

Are these actions fiscally responsible? Why would our Congresspeople put us in this situation?

Wait it gets worse. Now comes the Balance Amendment to the Constitution vote in the House. Several including Congressman Wittman voted “yes”. It order to balance the budget, they would have make big spending cuts. The big budget items Medicare, Medicaid and Social Security would likely have to be cut.

Please remind me why these people are still in office.