The latest word from the Congressional Budget Office is that by 2051 the country’s federal debt will double. By the end of this year, the country’s debt will already be 102% of GDP.
Worse yet, the 102% figure is on track to be a little over twice the country’s GDP within the next 30 years. Such a high government debt could raise borrowing costs, hamper economic input and have the ripple effect of a real financial crisis down the road.
Our national debt is underwritten by a robust economy, faith in confidence in the federal government’s ability to meet debt interest payments, and the continuing confidence of domestic and foreign securities holders. Take away one of those three elements, and all the gold in Fort Knox won’t keep the dollar from tanking and taking half the world’s economy with it.
And here’s another red flag: The CBO’s projection does not take into account the additional $1.9 trillion coronavirus relief package the Democrats have shoehorned through Congress. So, to inflate an old joke, a trillion here and a trillion there, and pretty soon you’re talking about real money.
Not one Republican voted for the stimulus bill. Critics pointed out that just a small fraction of the spending was for pandemic relief. However, proving once again that sometimes political deals take the path of least resistance, President Biden agreed to tighten eligibility for individual taxpayer stimulus payments.
The result is that the $1,400 stimulus checks will reach 16 million fewer Americans. Under the latest deal, Americans earning $75,000 or less are still on track to receive the $1,400 payment. However, eligibility for higher earners will be phased out faster. Individuals making $80,000 or more (double that for couples) won’t qualify for the money.
Nobody wants to turn down free money, but here’s something to consider if you’re worried that tightening the eligibility for stimulus payments could be a problem. Stimulus check payments are based on 2020 adjusted gross incomed. Eligible Americans at the top level of eligibility have reported $75,000 ($150,000 for married couples.)
That adjustment means that without itemizing one’s income, a single taxpayer can has already deducted $12,400 from his or her reported income. Double that for married couples filing jointly to $24,800. So, the bottom line is that someone who reported $75,000 income has really earned at least $87,400—well above the U.S. poverty guidelines published by the U.S. department of Health & Human Services.
Then there are all those billions going to states whose governments are doing fine weathering the flat revenues caused by the pandemic. One JPMorgan survey showed that at the end of 2020 state revenues for 47 states had declined by just 0.12%. The analysis showed that 21 states experienced positive revenue growth.
As states vie for their share of federal largesse, Republicans claim that the package is a “blue-state bailout” for states like New York whose draconian — and unduly restrictive — pandemic restrictions resulted in higher unemployment.