Source: The Congressional Budget Office Monthly Budget Review, July 2020.
The news story that caught my eye today was reporting of results of a recent CBS News poll:
Source: New York Post
If you sift through the details of that poll and try to form a summary judgement, it’s hard to paint the average Republican as anything but more-than-somewhat delusional. With a faith in the competence of the President that seems to transcend any amount of evidence to the contrary. And bigoted.*
* OK, that’s a pretty strong word, and requires some data-based backup. On the NBC News site, at the bottom, turn to page 14 of the first detailed poll document. Question 11, regarding the amount of attention being given to discrimination at present. Notice that it barely splits when viewed as Whites versus Non-Whites. Just 53% of Whites said the attention being given was “too much”. Compared to 81% of Republicans. Sure, everybody’s entitled to an opinion. I’m just saying that, to the extent that bigots exist in America, the odds suggest that any randomly-chosen bigot would be far more likely to be a Republican.
To paraphrase, compared to when That Muslim was in office, things are going great. Thank God for President Trump. That’s how I read it. But you make your own call on that. That’s all my subjective interpretation of the numbers.
Getting back to the facts, fact is, three-quarters of Republicans think things are going just fine.
What really floored me is why they think so. Aside from a touching faith in the President, a solid 70% of Republicans think American is better off now, than it was four years ago, due to the state of the economy. And fully two-thirds judged the state of the US economy to be “good”. (Where the only options were good or bad).
Despite all the current economic disruption. With 10% unemployment. With the largest single-quarter GDP decline in history. With the pandemic causing synchronized recessions all around the globe. But what really boggles my mind is that they think this, despite the largest peacetime Federal budget deficit in history.
So far, this fiscal year, the Federal budget deficit is $2.7 trillion. Of that $2.1 trillion was in the past four months alone. (Calculated from the Treasury monthly statements.) And we haven’t make it through the year yet. (The Federal fiscal year ends in September).
And, near as I can tell, the Federal government is probably going to have to continue to spend at something around that level to avoid sending the economy into the next great depression. It’s not like this is going to be a one-and-done. Earlier this year, the US CBO estimated a FY 2020 budget deficit of $3.7 trillion, and a FY 2021 deficit of $2.1 trillion.
Let me try to put this in perspective. Do you remember the financial crisis of 2008/2009? Those were some seriously dangerous times, economically speaking. About 10% of the banks in the US failed and were bailed out. The monthly unemployment rate peaked at 10%. And the S&P 500 lost more than half its value, and took close to six years to recover to prior highs (inflation adjusted).
At the peak of the 2008/2009 crisis, the US budget deficit was less than $1.5 trillion dollars, and less than 10% of GDP. And what an uproar all that deficit spending caused. I specifically recall the President at the time being excoriated for that huge amount of deficit spending. In response to that crisis. (Despite the fact that the Congress controls taxing and spending.)
And now? We’ve matched that unemployment at 10%, as before. But the CBO-projected US budget deficit for FY 2020 is $3.7 trillion, or somewhere around 18% of GDP.
Let me round that up just a tad. And come to this conclusion. Sure, things don’t look totally disastrous in the US economy right now. But that’s because one dollar in five spent in the US economy is a dollar that the Federal government borrowed. And if the Federal government stops doing that, there’s really no telling what will happen.
Ah, here’s the quote I want. What we’re living through now is …
" ... the largest annual leap in American indebtedness since Alexander Hamilton founded the nation’s credit in the 1790s ... "
That’s about halfway through this New York Times article.
How can any card-carrying Republican can characterize this economic situation as “good” is totally beyond me. How anyone could is beyond me. Necessary, maybe. Lesser of two evils, perhaps. For sure, the nations finances are vastly more screwed up than they were even in 2008/2009. Unless you like to have your economy depend critically on huge amounts of Federal deficit spending.
Except for one thing: This recession hasn’t really hurt the rich. Yet. In 2009, the markets crashed, and stock investors on average lost half of the value of their portfolios. And there was 10% unemployment. But, as of now, the current recession is a poor person’s recession. Unemployment is 10%, as it was before. But some stock indices are making new highs.
Some people, you really need to whup them upside the head to make them pay attention. My takeaway from all this is that what we need right now is a good old-fashioned stock market crash. Right now, the economic pain of this is falling mostly on low-wage workers. (And that’s why the current 10% unemployment rate doesn’t have the same impact is normally would. On a wage-dollar-weighted basis, it’s a pretty good bet that it’s far less than 10% of the total US wage bill at stake.) I think that unemployed low-wage workers fall into the category of “other people” to the average Republican. But Dow 12,000? I bet we’d see a lot more reality-based thinking coming out of the Republican party, and a lot less fantasy. We could use that now. But based on the poll numbers, short of a stock market crash or the next Great Depression, I don’t think we’re going to be seeing that any time soon.
P.S. Warren Buffet just bought gold. If that doesn’t grab your attention, nothing short of a market crash will. Whup
