US Treasury was warned by its advisory committee this past week that it will have to sell an extra $12 trillion of US government T-bonds over the coming decade as the US federal government debt increases from current $21 trillion to $33 trillion. On same day, US Senators, Sanders and Shumer, introduced a bill to require corporations to pay more wages and benefits if they want to keep buying back their stock and paying dividends. The total combined buybacks-dividends in 2018 was $1.4 trillion, up from $1.1 trillion in 2017 and from $500 billion in 2009. And all that just for the Fortune 500 largest US corporations. Since the 2008 crisis nearly $9 trillion has been distributed by US corporations to their shareholders.
Listen to my Alternative Visions radio show of February 8, 2018 for the discussion on these and related topics of the past week.
GO TO:
http://prn.fm/alternative-visions-12-trillion-crisis/
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http://alternativevisions.podbean.com
SHOW ANNOUNCEMENT
As the main topic of the show, Dr. Rasmus discusses the letter to the US Treasury by the Treasury Bond Advisory Committee (TBAC) this past week, warning that $12 trillion more in US Treasury bond sales will be needed over the next decade in order to finance rising US government debt. The $12T more per the TBAC is about equal to the net increase in federal debt (from current $21T to $33T) that Rasmus has been predicting will occur by 2028 due to Trump tax cuts, rising defense spending, and the next recession around the corner—with Interest payments on that debt alone equaling $900 billion a year, per the CBO. In a related topic, Rasmus discusses the latest data that show that Fortune 500 corporations’ stock buybacks plus dividend payouts will reach $1.4 trillion for 2018—up from $1.1 trillion in 2017 and from $500 billion in 2009. How the two trends of escalating government debt and accelerating $trillion a year plus buybacks-dividends are connected. The latest on Trump-Powell confrontation over rate hikes and coming breakdown of Russia-Saudi agreement on oil production are also addressed.
Dr. Jack Rasmus @drjackrasmus
Jack Rasmus 
There are hints in this broadcast that the “double deficit” is unraveling. Dr. Rasmus has explained at length that the US has been running a double deficit for decades; that is a trade deficit and a budget deficit. Those deficits are in part driven by huge tax cuts for the wealthy and enormous military expenditures going back to the Reagan administration. In order to maintain these deficits, our trading partners must purchase enormous amounts of US bonds. But there are hints in this broadcast the US trading partners are no longer absorbing the huge and growing US debt problem; they appear to be slowly distancing themselves from the US dollar and diminishing the amount of US debt they hold. This is consistent and complementary with the dire warnings that emerged from the Davos conference. Watch out.
Yes, you’re right to have picked up that inference. Today it was announced the US debt hit $22 trillion. And the Wall St. Journal also reported that federal tax revenue fell in 2018 despite robust growth and lowest unemployment rate in five decades(which of course is a phony stat). The US deficit is up $200b, a 28% increase. Meanwhile, China, Russia and others are reducing their T-bonds and buying gold with a frenzy. US sanctions and threat of trade war are thus reducing foreign purchases of US govt bonds. So too is the chronic low rates of interest the Fed will now pay as it now stops raising rates (and soon will lower). Lower rates attract fewer buyers. In short, deficits are going up longer term ($12 T to be added to the current $22 T US debt by 2028) and with them debt. A recession will lower tax revenues and raise the deficits and debt still further–just as sanctions and central bank rate policy will attract fewer buyers of bonds.
In short, Trump’s trade war and accelerating US use of sanctions reduces foreign buyers, while Trump’s tax cuts, war spending, and Trump’s coming recession expand the budget deficits and debt totals. Financing the budget deficit and debt through the trade deficit will becoming increasingly difficult. So what will be the alternative? Only two possible: reverse Trump tax cuts, raise taxes on corps. and wealthy, reduce war spending, reduce medical costs for medicare and big pharma drug prices paid by government health programs, or…guess what?: attack social security, medicare, education, transportation, and other social discretionary spending to pay for it all. (That’s most likely under Trump and Republications next two years).