CBO: Trump's Economy Sucks And Will Collapse
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2020-01-29 09:38 by Karl Denninger
in Federal Government , 220 references Ignore this thread
CBO: Trump's Economy Sucks And Will Collapse
[Comments enabled]

No, that's not what the printed headline is.

But it is what the actual headline is.

At 4.6% of GDP any GDP growth rate under 4.6% is actually negative.  Ignore the so-called "real" GDP reported by the BEA; that uses their internal "deflator" which is flat-out bull****.  Again, headline GDP has not exceeded 4.6% and there is no projection it will for 2020 either; utterly nobody believes that sort of number, never mind a 5.4% one by 2030.

This means the economy is, in real terms, contracting.

CBO is also projecting that "inflation adjusted" GDP will expand by 2.2% in 2020.  This is their false deflator lie.  Remember that inflation is always a monetary phenomena; it is never anything else.  Further, the natural state of all economies absent tampering is mild deflation and that's desirable; it is the result of productivity growth and innovation.

Doing more with less is to your benefit.  It means prices fall in real terms and that in turn means an hour of effort buys more.  You, not the government, own that.  Taking it from you via fiscal deficits is theft-at-gunpoint and should result in an immediate secession by the States and The People.  Consider what your response is to a gun up your nose coincident with a demand for your wallet.  That is what fiscal deficits are, so why do you react in any other way when the government does it?


The problem with the CBO's analysis is that it always undershoots.  This is not because the CBO is "biased" per-se; that is, it's not their intentional act to protect either or both parties in government.  It is a result of the mandates under which they operate; the CBO is required to assume that any tax or revenue change that has a sunset in it will actually expire.

In practice they never do expire; the 900lb Gorilla in this one is the Medicare "extenders" that are passed every single year in the form of what is called the "Doc Fix"; the CBO is required to assume that this will not be passed and yet it, and all the other pieces of legislation like it, are required to be assumed to actually expire even though historical practice is that they never do.  As such the CBO always understates deficits, and it's the enabling law from Congress that makes it such.

To put this in more-blunt terms the CBO is required by law, passed by Congress, to lie to you.

Isn't that special?

In any event reality is that on the present path as I've been pointing out for more than 10 years we will not make it to 2030.  By 2024 on current paths the medical monster will collapse the Federal Budget and most State budgets as well.

We either fix that -- not put band-aids on it, or attack an 8% slice of it with a 10% reduction (which would be less than a one percent change in spending) but take a sledge-hammer to the entire thing and start locking people up under 100+ year old law if they refuseright here and now, or we're looking at something materially worse than the 1930s within the next few years.  You can bet The Fed and Congress will try to evade that outcome, of course, but unless the root cause is addressed any attempt to do so will make it worse rather than better.

Time's up.

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