President Trump’s Big Beautiful Bill has managed to raise the federal debt by another $700-billion dollars just during the first four months of his presidency in the present fiscal year. Bill did this by handing massive tax breaks to billionaires while helping drive inflation and interest costs, and also by leaving about 10-million more middle-class people without health insurance. Bloated Bill is, in fact, creating the largest transfer of wealth to Trump and his friends in US history.
Even with the revenues gained from the Trump administration’s tariffs, federal receipts are projected to be fully 3 percentage points of GDP lower than they were at their peak during the Clinton administration. Given today’s GDP, that revenues loss is the equivalent of $940 billion per year….
These fiscal issues matter more now than they have in the past because of the greater likelihood of a significant “debt event” and the ensuing pressures on interest rates, as well as the nation’s ability to service its debt and still sufficiently invest in public goods such as infrastructure, education, and workforce training.
The likelihood of a debt event of some magnitude has gone up because of higher debt and worsening economic conditions relative to previous projections. At worst, this means a significant and potentially sudden loss of faith in the quality of U.S. debt, leading to a sharp spike in interest rates, which then likely would cause a debt spiral.
Something long warned about in the alternative press.
“If we continue to borrow at this rate, it leaves us on the path to another year of a $1.8 trillion or higher deficit,” MacGuineas stated Monday. “If these estimates aren’t alarming enough, the national debt continues to climb toward record levels – equaling about the size of the entire U.S. economy today.”
Due to excessive borrowing, the $38 trillion national debt stands at 100% of Gross Domestic Product. The highest percentage the national debt has ever made up of GDP was 106%, and that was immediately following World War II….
“Unless lawmakers want record-high debts and deficits to be our norm, both sides of the aisle must come together to address our unsustainable borrowing,” MacGuineas said. “The longer lawmakers wait, the higher the price for Americans.”
Many others have been warning of that for decades, but no one in either party has been listening. Or, at least, the very few who claim to have been listening haven’t done anything about it.
That percentage of GDP can rise a lot in just one quarter if GDP drops, and market indicators show the likelihood that it is dropping, even though government reports are still mostly stalled from coming in.
The economy is on sale
We do have one government report that is an indicator of what will happen in GDP for the fourth quarter of 2025, after inflation is subtracted to get “real GDP” whenever GDP is finally reported.
Consumer activity slowed sharply for the December holiday shopping season amid a spate of rough weather, tariff impact and persistently higher inflation, the Commerce Department reported Tuesday.
Retail sales were flat on the month following a 0.6% increase in November, according to numbers adjusted for seasonality but not inflation.
Adjust inflation out, and that means, on an annual basis, real retail sales fell. The headline says they were flat, but that was because they were measured with inflated dollars, not because there were more sales. It just costs people more to buy less.
You see …
On an annual basis, sales rose 2.4%, a considerable step down from the 3.3% pace in November.
However, on an annual basis, inflation rose 2.9%. So that means real sales actually decline by half a percent … on an annual basis … because the goal is not to measure the effect of inflation but the increase or decrease in purchases. Moreover, people on the higher end of the social scale—the group that benefits from Big Bountiful (to the rich) Bill—bought more, while those who are getting hit with higher health costs (along with all their neighbors in their social strata) bought less but still spent more to get it.
For December, multiple categories [of purchased goods] posted losses while only a few showed notable gains.
So, the economy keeps ebbing away, and, as I commented a few posts back, it is only fierce buying by the rich that is keeping purchases looking about flat. I reported that the top 10% are doing 50% of all the spending.
“This is a K-shaped economy with strong spending from the top and much more cautious spending from middle- and lower-income consumers,” said Heather Long, chief economist at Navy Federal Credit Union.
And GDP is likely to fall if honestly reported (yeah, right) and if inflation is accurately calculated and subtracted out of it (as it hasn’t been in years) because …
Consumer spending makes up more than two-thirds of all economic activity in the U.S.
But, of course, it is accurate inflation data (or any inflation data) that is most conveniently lacking right now.
Feeling taxed by Tariffs
As for what forces are hitting the American consumer so hard that consumer activity is dying back, the answer is—as I’ve said, we will find as time goes on—the Trump Tariffs.
New analysis shows Trump’s tariffs have pushed up US living costs, with consumers bearing most of the burden….
The study examined more than 25 million shipment records covering over $4 trillion in US imports.
As I’ve argued from the start, we will find that only a tiny portion of Trump’s tariffs are offset by foreign producers dropping prices in order to save sales in the US. Trump has been lying to you every time he has said foreign nations are paying tariffs to the US:
Julian Hinz, Research Director at the Kiel Institute and one of the authors of the study, said: “The tariffs are an own goal, The claim that foreign countries pay these tariffs is a myth. The data show the opposite: Americans are footing the bill,” he said….
The findings add to wider assessments that point to tariffs functioning as a domestic tax. One analysis states: “The Trump tariffs are the largest US tax increase as a percent of GDP … since 1993.”
So, there you have it: the Trump Tax Hikes hit average Americans, even as he carved out more huge tax cuts for corporations, which are mostly owned by the rich. People can keep defending the government liars who keep claiming that tariffs are not a tax on Americans if they love being lied to. In that case, I guess they deserve to be paying much higher taxes because they are more interested in defending their own team than in the truth.
The White House still lies outright today by claiming “inflation has actually cooled … GDP growth has accelerated, and trillions in investments continue pouring in to make and hire in America.” All lies.
We might not be getting the truth out of shut government departments, but we are getting it from other financial sources:
The effects are being seen across everyday spending, with higher prices reported for basic goods. Apparel and leather products have seen price increases of 34% and 36% respectively, while the average cost of a car has risen by about $5,700, according to the Eurasia Review.
Trump warns of possible devastation to come
As the Supreme Court has cast a suspicious eye on the legality of the Trump Tariffs, Trump is notifying the public about how devastating his dictatorial approach to ruling the nation will be if the court decides his dictates exceeded his authority:
Reacting on Truth Social, President Donald Trump warned of major consequences if the court overturns his authority.
Which, of course, his own appointed court would only do if he actually never had that authority, as many have been saying.
He said the US would be “screwed,” due to the scale of repayments that could be owed to American companies.
Yes, it will be. In which case, thank you for running an unconstitutional government and, thereby, becoming God’s wrecking ball for America! (If the Trump prophets are right about his divine anointing, perhaps they just got God’s purpose wrong. (Not that I think they are right about anything, but they think they are; therefore, they can also own the destruction for pumping the Trump.) Trump’s own warning of the devastation his actions will bring if overruled as illegal continues:
“And that doesn’t include the amount of payback that Countries and Companies would require for the investments they are making… for the purpose of being able to avoid the payment of Tariffs,” he said.
In other words, the cost of pushing the legal envelope via kingly decrees, instead of congressional legislation—if it winds up that the mostly Trump-appointed court decides Trump pushed his constitutional and statutory authority to the breaking point by acting as king for a year—will be an absolutely massive and chaotic correction to a year of illegal policy.
“When these Investments are added, we are talking about Trillions of Dollars!” he said. “It would be a complete mess, and almost impossible for our Country to pay.”
Yes, Mr. President, that WILL be the cost you have brought down on the US if the Supreme Court rules that you acted outside your constitutional authority so that restitution has to be made. It will be as calamitous as you admit!
Trump is already setting up to dodge the blame, fearing it may be coming by claiming it will be the Supreme Court’s fault for not recognizing his right to be king:
“In other words, if the Supreme Court rules against the United States of America on this National Security bonanza, WE’RE SCREWED!” Trump said.
No. If it rules against YOU! If that happens, then what you illegally did to everyone in the world means we’ll all be screwed BY YOU! And some of those Epstein girls might know what that feels like because you seem to be endlessly covering all of that up, too. Most depraved and dishonest government in US history! The most peculiar part is that my fellow Christians are often the ones defending everything he does, no matter how blatantly dishonest, audaciously self-serving, unkind, or vile.
The lies and cover-ups are endless. Take, for example, the following farce of transparency by the Trump DoJ, which is now legally responsible for unredacting ALL redactions made by the FBI (their sub-agency), regardless of when the redactions were first made:
The “unredacted files” shown in a private setting to members of Congress were still redacted!
Endless coverups by the Trump DoJ and its female head, rather than protecting underage women from sexual users/predators.
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