The U.S. government registered a budget deficit of $98.0 billion for the month of July. Total revenues received by the government in the month accounted for $200 billion, and it spent $298 billion. (Source: Department of the Treasury, Bureau of Fiscal Service, August 12, 2013.) So far in the government’s fiscal year, which began in October of 2012, the U.S. government has incurred a budget deficit of $607 billion. In addition, it received $2.28 trillion and spent $2.89 trillion. While politicians will certainly try to spin the declining budget deficit into something good, we continue to move into unchartered waters. Let me explain. When a government registers a budget deficit, it has to come up with money to pay for its expenses. Usually, to fund its expenses, it goes out and issues bonds, thus increasing the national debt. At this point, this process has become problematic for the U.S. economy. Over the past four years, our national debt has skyrocketed to an unprecedented level due to multiple years of trillion-dollar budget deficits. We are the nation with the highest nominal national debt. The four risks to a ballooning budget deficit… So far in the fiscal year, October 2012 to July 2013, the U.S. government has paid interest of little more than $370 billion on the debt it has issued. This amount has increased almost 15% from the same period in the last fiscal year, when it was $322 billion. For the entire fiscal year, the government expects to pay interest of $414 billion. But we all know interest rates are rising. This morning, the 10-year U.S. Treasury yields 2.71%. Last year at this time, the yield was only 1.73%. Interest rates on the bellwether U.S. Treasury have jumped 57% in 12 months! The government’s interest expenses over the next few years could double; sending its budget deficit sky-high.
Posted on: Fri, 16 Aug 2013 19:44:09 +0000
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