This article appeared online at TheNewAmerican.com on Wednesday, April 8, 2020:
The Congressional Budget Office (CBO) projected that the federal government would run a deficit this fiscal year of more than $1 trillion, or about five percent of the country’s gross domestic output of goods and services.
William Foster, the lead U.S. analyst at Moody’s, the credit rating agency, says the deficit, thanks to the CARES (Coronavirus Aid, Relief, and Economic Security) Act, will instead likely approach 10 percent of GDP, while Fitch Ratings is predicting it will be closer to 13 percent. Either way, they both predict that the deficit this year will exceed the previous post-World War II record for the deficit, set in 2009, when it was 9.8 percent of GDP.
The CARES Act is injecting an expected $2 trillion of new money into the economy in order “to provide emergency assistance and health care response for individuals, families, and businesses affected by the 2020 coronavirus pandemic,” according to the act’s complete title. Other credit facilities, by loosening credit requirements, are expected to add up to another $4 trillion, with talks currently underway for CARES 2.0 to add even more new money to the economy.
None of this was taken into account by Truth in Lending, the non-partisan think tank that promotes “transparent government financial information,” when it published its latest report on the nation’s current financial condition on April 7. Instead of repeating the canard that the national debt is only around $23 trillion, it reported that the federal government actually owes more than $113 trillion when “off-budget” items such as Social Security and Medicare are added back in.
For this, the think tank gave the federal government a financial grade of “F.”
David Stockman, President Ronald Reagan’s director of the Office of Management and Budget from 1981-1985, called the move to flood the economy with new money the “greatest folly”: