Sidebar

[xtb]

The Federal Reserve Is Taking Us into Uncharted and Deadly Waters

When Joe Biden promises to spend $1.9 trillion, where exactly does that money come from? Beyond that, even excluding the $1.9 trillion, how does the government finance four years of deficits, which the Congressional Budget Office recently estimated at $5.9 trillion? That's an expected one-term cumulative deficit of $7.8 trillion. Where indeed does this money come from?

The wrong answer is tax receipts. In FY2020, federal budget revenues — i.e., tax receipts — totaled $3.4 trillion — $1.6 trillion from income taxes; $1.3 trillion from payroll taxes; $0.2 trillion from corporate taxes; and the balance of $0.3 trillion from excise, custom duties, estate taxes, and miscellaneous. Spending, on the other hand, totaled $6.6 trillion, versus the pre-COVID budget of $4.8 trillion. The result is a record $3.1-trillion deficit.

Scale matters here. One point nine trillion dollars is 40% more than the total regular spending of the entire U.S. government. And that is on top of $3.5 trillion in COVID spending already committed, of which some $1.0 trillion has yet to be spent. Put another way, Biden could triple income tax receipts in 2021, from all taxpayers, and still not pay for this year's forecasted $4.2-trillion deficit, including his plan. Taxing the wealthy does not work, either, as a 1% rise in the highest two tax brackets raises, by these standards, a mere $120 billion over 10 years, an amount that will decline as higher rates change behavior.

Bottom line: There is no money in tax receipts to pay $1.9 trillion, or indeed any of the $7.8-trillion unfunded spending coming our way.

https://www.americanthinker.com/arti...ly_waters.html