Atlanta, April 7, 2020 —Allen Buckley, a fiscal conservative independent candidate in the special election race for the U.S. Senate seat currently held by Kelly Loeffler, says the U.S. is now treading on thin financial ice.
For many years, the CDC had warned about a potential pandemic, for which it would not be able to produce an effective vaccine on a timely basis. Few listened. Similarly, for many years, the GAO, CBO and credible financial organizations outside the federal government have been warning of a looming federal debt crisis. Similar to the pandemic warning, few have listened.
Current total federal debt is roughly $23.5 trillion. Public debt is approximately $17.5 trillion. Annual federal revenue has never exceeded $3.5 trillion. Deficits have been run since the turn of the century. For 2019, when unemployment was at a 50-year low, the deficit was approximately $1 trillion. Larry Kudlow recently stated he expects the CARES Act to drive total federal debt to exceed $25 trillion. However, that figure will very likely be low. In this regard, there is now ongoing talk of a second CARES-type act. In 2007, when total federal debt was less than $9 trillion, the GAO said: “GAO’s current long-term simulations continue to show ever larger deficits resulting in a federal debt burden that ultimately spirals out of control.”
The federal budget for 2020 had called for $3.6 trillion of revenue and $4.7 trillion of spending. The CARES Act will increase spending by at least $1.4 trillion. Employers can defer paying their share of the Social Security tax for the remainder of 2020 until 2021 (half) and 2022 (the other half). That change should cut Social Security revenue by roughly $400 billion. While the reduction to anticipated revenue due to the Coronavirus has not yet been quantified, it will very likely exceed $800 billion. (In this regard, actual 2009 federal revenue was 78 percent of budgeted revenue ($2.1 trillion v. $2.7 trillion).) Thus, spending should increase to at least $6.1 trillion (not considering a potential second CARES Act) and revenue will likely be $2.4 trillion or less. Such a combination would produce a deficit of $3.7 trillion, boosting total debt to roughly $27 trillion and public debt to roughly $21 trillion at a time when Gross Domestic Product may drop below $20 trillion.
Buckley said: “Our nation is now skating on thin financial ice. While a smart significant outlay should be made due to the pandemic, the numbers are getting out of hand. At some point, someone will say ‘the emperor has no clothes.’ If creditors refuse to refinance existing debt inexpensively—and the Fed and the Treasury Department are assuming they’ll continue to be able to refinance cheaply—the pandemic that we’d been warned of could turn into the debt crisis we’ve been warned of. Whether it does or doesn’t, the U.S. needs to get its financial house in order very soon after the pandemic ends. Printing of money in large quantities through quantitative easing or otherwise could spell the end of our financial system. And, the end of our financial system could spell the end to our system of government. Had we balanced the budget every year after 2009 when our nation wasn’t in recession, as I’ve advocated, total federal debt would be approximately $8 trillion less, and the situation would be very manageable from a financial and monetary perspective. We didn’t.”
Mr. Buckley’s “Save Tomorrow” campaign is about living for today and tomorrow, instead of living for today to the detriment of tomorrow. The focus is on doing things to make tomorrow as good as or even better than today, by acting now to address the nation’s financial challenges and confronting global warming in a practical way.
Mr. Buckley is an attorney/CPA. He can be reached for comment at (404) 610-1936. Mr. Buckley’s campaign website is www.buckleyforsenate.org.