The deficit last month of $176 billion was $20 billion worse than a year ago, and is the single worst October reading in US history. The number was a function of $312 billion in outlays and just $135 billion in receipts, an 18% decline YoY, and also the weakest reading for the month of October since 2002. The $176 billion deficit represents a new downward inflection point as it was worse than both the CBO's expectation ($175) and the consensus estimate of $165.9 billion. Most interesting is the amount of interest on US debt paid: in October the government paid out $17.93 billion of net interest expense, $1 billion lower than the $18.98 billion spent in October 2008. The question of what happens to this number once the Fed stops monetizing the debt and keeping rates artificially low stands open.
That's right -- once interest rates start rising, things could get extremely interesting for our impoverished Uncle. And us. And our bond holders.
It's almost enough to make the gloom of non-hurricane Ida that's gripped Central Virginia seem positively cheerful by comparison.
And it's also a very good reason why some in DC are pondering, and even working out the details of, a value added tax. Not to replace any of the other taxes we pay, mind you. But to generate even more cash to feed the federal beast.
2 comments:
Why does this make me think of Mr. Creosote? Somehow it seems appropriate.
It's too early for that sort of imagery.
But it is appropriate...and wafer thin.
Post a Comment