Jul. 2019 – A Trillion Here, A Trillion There

Everett Dirksen (U.S. Senator 1951-1969), exasperated with mounting federal expenditures, is said to have quipped “a billion here, a billion there, and pretty soon you’re talking real money.” By today’s federal spending standards, “a trillion” might well be substituted for “a billion.”

Both the deficit and debt are at an all-time high. The annual federal deficit for 2019 is set to exceed $1 trillion1 while gross outstanding federal debt – the accumulated annual deficits and surpluses since 1789 – now stands at $22 trillion. Despite a robust economic expansion since 2009, this debt has increased from 82 percent to 106 percent of GDP.

Congress and the President appear indifferent. In late July they suspended their mutual recriminations long enough to increase spending by $320 billion over the current spending cap, and to raise the government’s borrowing limit through 2021. Meanwhile the looming 2020 election has elicited spending promises detached entirely from fiscal reality. For example two independent studies have estimated that over the next 10 years alone “Medicare for All” would add over $30 trillion to the federal debt.

The chart below shows that growing tax receipts since the Great Recession (ended June 2009) have been outpaced by spending. Government spending is of great concern to investors because (login to continue)

Also in This Issue:

Investment Fallacies Part One
Sound Money, Property Rights and Sound Investing
Quarterly Review of Capital Markets
The High-Yield Dow Investment Strategy
Recent Market Statistics
The Dow-Jones Industrials Ranked by Yield
Recommended Investment Vehicles