03 lutego 2018

Trump nowym królem deficytu w czasach pokoju i prosperity

Too Much Short-Term Borrowing as Deficit Climbs.

For decades, the U.S. government could issue as much debt as it needed to finance deficits without worrying about how it affected financial markets or the economy. That might be changing.

A group of private banks that advise the Treasury—known as Treasury Borrowing Advisory Committee, or TBAC—estimated the Treasury would need to borrow on net $955 billion in the fiscal year that ends Sep. 30, up substantially from $519 billion the previous fiscal year, according to Treasury documents released Wednesday. The TBAC group estimated that would rise further to $1.083 trillion in fiscal 2019 and $1.128 trillion in fiscal 2020.

It would mark the first sustained acceleration in Treasury borrowing since the 2007-2009 recession, when the financial crisis caused a rush of government borrowing to fund financial bailouts and increased safety net spending at a moment of declining in tax revenues.

Treasury’s increased borrowing now comes against a much different economic and financial backdrop. The economy is strong and inflation is expected to rise gradually in the months ahead. In response, the Fed is pushing short-term interest rates higher and allowing its portfolio of Treasury and mortgage debt to shrink as bonds mature. Moreover, investors are shifting out of safe assets like Treasury bonds and into fast-rising stocks. That combined appears to be putting downward pressure Treasury prices and upward pressure on long-term interest rates.

The $1.5 trillion tax cut Congress passed and the president signed into law last year is expected to boost deficits over the next decade. The nonpartisan Joint Committee on Taxation estimated that, after accounting for economic growth from the tax plan, the law could add $1 trillion to the deficit by fiscal year 2027, with more than half of that coming in fiscal years 2018, 2019 and 2020.

The TBAC estimates for the deficit and the government’s borrowing needs were substantially higher than its previous forecasts, as well as the forecasts from the Congressional Budget Office and Office of Management and Budget. That reflected “current fiscal uncertainty,” Treasury told its borrowing advisory committee, according to minutes of the meeting.

Bond market analysts said they expected the Treasury’s next quarterly funding statement in May will include plans for additional borrowing increases. “This is not the last of the supply increases, by any means,” said Aaron Kohli, an interest-rate strategist at BMO Capital Markets.

I na koniec wykresik. Pierwszy w histori nowożytnej wzrost deficytu w czasie gospodarczego boomu i czasu pokoju. Chociaz tu  niektorzy twierdza że pokoju nie mamy, a mamy trwającą już gospodarczą wojnę.

Artykul za WSJ.

January 29 – Reuters (Susan Cornwell): “As the U.S. Congress limps toward the likely passage next week of another stopgap spending bill to avert a government shutdown, a Washington think tank has estimated the federal budget deficit is on track to blow through $1 trillion in 2019. If it does, it would be the first time since 2012 the U.S. economy will have to support a deficit so large, highlighting a basic shift for the Republican Party, which has traditionally prided itself on fiscal conservatism. The Committee for a Responsible Federal Budget… said the red ink may rise in fiscal 2019 to $1.12 trillion. If current policies continue, it said, the deficit could top a record-setting $2 trillion by 2027.”

January 30 – New York Times (Sui-Lee Wee): “Chinese officials have warned that they will retaliate against American companies if President Trump imposes tariffs on China, an American business group said…, with airplanes and agricultural products among the likely targets. The warning, issued by the American Chamber of Commerce in China, came just hours before Mr. Trump was expected to address the issue during his State of the Union address. The Trump administration is investigating whether it should impose a series of trade actions against China, in areas like technology and intellectual property theft as well as in traditional areas of trade disputes like steel and aluminum.”

January 29 – Bloomberg (Jonathan Stearns and Nikos Chrysoloras): “The European Union gave President Donald Trump a fresh warning about any U.S. curbs on imports from Europe by pledging rapid retaliation, highlighting the persistent risk of a trans-Atlantic trade war. The EU fired the shot across the U.S. bow after Trump said… over the weekend that he has ‘a lot of problems with the European Union.’ This ‘may morph into something very big’ from ‘a trade standpoint,’ he said… ‘The European Union stands ready to react swiftly and appropriately in case our exports are affected by any restrictive trade measures from the United States,’ Margaritis Schinas, chief spokesman of the commission, the 28-nation EU’s executive arm, told reporters…”

January 28 – Reuters (Steve Holland and Pete Schroeder): “President Donald Trump’s national security team is looking at options to counter the threat of China spying on U.S. phone calls that include the government building a super-fast 5G wireless network, a senior administration official said… The official, confirming the gist of a report from Axios.com, said the option was being debated at a low level in the administration and was six to eight months away from being considered by the president himself. The 5G network concept is aimed at addressing what officials see as China’s threat to U.S. cyber security and economic security.”

4 komentarze:

  1. Analysis: Government set to borrow nearly $1 trillion this year, an 84 percent jump from last year.

    t was another crazy news week, so it's understandable if you missed a small but important announcement from the Treasury Department: The federal government is on track to borrow nearly $1 trillion this fiscal year — President Donald Trump's first full year in charge of the budget.

    That's almost double what the government borrowed in fiscal year 2017

    Here are the exact figures: The U.S. Treasury expects to borrow $955 billion this fiscal year, according to a documents released Wednesday. It's the highest amount of borrowing in six years, and a big jump from the $519 billion the federal government borrowed last year.

    Treasury mainly attributed the increase to the "fiscal outlook." The Congressional Budget Office was more blunt. In a report this week, the CBO said tax receipts are going to be lower because of the new tax law.

    The uptick in borrowing is yet another complication in the heated debates in Congress over whether to spend more money on infrastructure, the military, disaster relief and other domestic programs. The deficit is already up significantly, even before Congress allots more money to any of these areas.

    "We're addicted to debt," says Marc Goldwein, senior policy director at Committee for a Responsible Federal Budget. He blames both parties for the situation.

    What's particularly jarring is this is the first time borrowing has jumped this much (as a share of GDP) in a non-recession time since Ronald Reagan was president, says Ernie Tedeschi, a former senior adviser to the U.S. Treasury who is now head of fiscal analysis at Evercore ISI. Under Reagan, borrowing spiked because of a buildup in the military, something Trump is advocating again.


    1. The White House got a taste of just how problematic this debt situation could get this week. Investors are concerned about all the additional borrowing and the likelihood of higher inflation, which is why the interest rates on U.S. government bonds hit the highest level since 2014. That, in turn, partly drove the worst weekly sell-off in the stock market in two years.

      The belief in Washington and on Wall Street has long been that the U.S. government could just keep issuing debt because people around the world are eager to buy up this safe-haven asset. But there may be a limit to how much the market wants, especially if inflation starts rising and investors prefer to ditch bonds for higher-returning stocks.

      "Some of my Wall Street clients are starting to talk recession in 2019 because of these issues. Fiscal policy is just out of control," says Peter Davis, a former tax economist in Congress who now runs Davis Capital Investment Ideas.

      The Federal Reserve was also buying a lot of U.S. Treasury debt since the crisis, helping to beef up demand. But the Fed recently decided to stop doing that now that the economy has improved. It's another wrinkle as Treasury has to look for new buyers.

      Tedeschi, the former Treasury adviser to the Obama administration, calls it "concerning, but not a crisis." Still, he says it's a "big risk" to plan on borrowing so much in the coming years.

      Trump's Treasury forecasts borrowing over $1 trillion in 2019 and over $1.1 trillion in 2020. Before taking office, Trump described himself as the "king of debt," although he campaigned on reducing the national debt

    2. The Committee for a Responsible Federal Budget predicts the U.S. deficit will hit $1 trillion by 2019 and stay there for a while. The latest borrowing figure - $955 billion - released this week was determined from a survey of bond market participants, who tend to be even faster to react to the changing policy landscape and change their forecasts.

      Both parties claim they want to be "fiscally responsible," but Goldwein says they both pass legislation that adds to the debt. Politicians argue this is the last time they'll pass a bill that makes the deficit worse, but so far, they just keep going.

      The latest example of largesse is the GOP tax bill. It's expected to add $1 trillion or more to the debt, according to nonpartisan analysis from the Joint Committee on Taxation (and yes, that's after accounting for some increased economic growth).

      But even before that, Goldwein points to the 2015 extension of many tax cuts and the 2014 delays in Medicare reimbursement cuts.

      "Every time you feed your addiction, you grow your addiction," says Goldwein.

      There doesn't seem to be any appetite for budgetary restraint in Washington, but the market may force Congress' hand.

  2. The Fed Just Stabbed Its “Silent Partners” In The Back – and You’re Next


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