Treasury Borrowing Running At Crisis-Era Levels

ZeroHedge, Nov 06, 2023 – Excerpts:

With the November quarterly refunding announcement now in the rearview mirror, we look to the Treasury’s borrowing outlook in historical context. As a reminder, we already gave our verdict last week…

US To Borrow $1.5 Trillion In Debt This & Next Quarter, After Borrowing A Massive $1 Trillion Last Quarter https://t.co/DYyMGKi5RJ — zerohedge (@zerohedge) October 30, 2023

… Deutsche Bank rate strategist Steven Zeng who on Friday published a chart that takes the numbers from the Treasury’s sources and uses table with adjustments to remove the fluctuations in the TGA. This provides a cleaner comparison of quarter-by-quarter borrowing. For example, the Treasury borrowed $1.01 trillion during Q2’23, with $756bn used for financing the deficit and QT, and $254bn was “saved” in the form of a higher cash balance.

In this light, Zeng notes that the Treasury’s expected borrowing for the current and the next quarter is actually larger than Q3’s, growing by about $10 billion per month. In fact, Treasury borrowing is now on par with levels during the 2020-2021 pandemic with both weaker fiscal positions and Fed QT are contributing factors.…

As Zeng puts it, “with a growing view that the Fed may lengthen the duration of QT, and annual deficits projected at around $1.7- $1.8 trillion over the next few years, these issues are unlikely to go away soon.” At the same time, the widening mismatch between supply and demand for Treasuries could exacerbate the issue through increased debt interest expenses.

Goldman has some even more disturbing numbers: according to the bank’s rates strategist Praveen Korapaty, his outlook for Treasury supply in 2024 shows net notional issuance of $2.4 tr, which is inclusive of both bills and coupons. Gross coupon issuance would be much larger, roughly $4.2 tr, which includes issuance to cover maturing debt.

These concerns will remain in the forefront in 2024, with the TBAC highlighting this week the linkage between term premium and fiscal sustainability…

The thing about Wall Street is that if everyone agrees to stick their head in the sand and ignore the elephant in the room, it’s easy to do.

The problem is when someone notices the elephant. That’s what the TBAC did today pic.twitter.com/mJLbzvbpD0 — zerohedge (@zerohedge) November 2, 2023

… and that debt and debt service costs should be a consideration for policymakers.

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It is time to kickoff America’s ‘elephant roundup’ ...

The Leviticus 25 Plan will generate, conservatively, $619.5 billion budget surpluses annually in its first five years of activation.

The Leviticus 25 Plan – An Economic Acceleration Plan for America

$90,000 per U.S. citizen – Leviticus 25 Plan 2023 (10442 downloads)

Net effect of the Earmarks inclusion: $16,012,272,565 of your tax dollars to be spent on 7,509 earmarks.

In the fiscal year 2024 spending bills being debated this fall, the top 63 earmarkers in the U.S. House are Republicans. Eight of the top ten earmarkers in the U.S. Senate are Republican

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Earmarks Are Back: House Republicans “Opened the Bar” For the Spendaholics

ZeroHedge, Oct 15, 2023 – Via OpenTheBooks.com – Excerpts:

…….Unfortunately, the first thing the GOP did after they took control of the U.S. House – before the new Congress was even sworn in – they held a secret vote on earmarks. Last December, 158 GOP members of Congress voted to include earmarks in the year-end omnibus spending bill.

House Republicans “opened the bar” for the spendaholics.

Those 158 secret-voting members caused $16,012,272,565 of your tax dollars to be spent on 7,509 earmarks.

Not only did those 158 members adopt earmarks, the Republicans spent more of your tax dollars than their Democratic earmarking colleagues.

In the fiscal year 2024 spending bills being debated this fall, the top 63 earmarkers in the U.S. House are Republicans. Eight of the top ten earmarkers in the U.S. Senate are Republicans.

The U.S. House has a bartender at the spendaholics earmark bar – Rep. Kay Granger (R-Texas). She chairs the Appropriations Committee that approves every one of those earmarks. When she was elected to Congress in 1997, the federal debt was $5.4 trillion.

Here are a few examples of what these big spending members of Congress – in both parties – think is more important than the exploding federal debt.

Senator Susan Collins (R-Maine) earmarked $302 million last December and $556 million stuffed inside the 2024 bills. Maine’s population is only about 1.3 million and Collins earmarked $2,640 per family of four. When Collins was first elected in 1997, the federal debt was $5.4 trillion….

Last December, Senator Patrick Leahy (D-Vermont) earmarked $30 million to the University of Vermont Honors College. In May, the trustees renamed the college after Leahy. Leahy earmarked $34 million into the international airport at Burlington. In April, the city council renamed the airport after Leahy. Senator Leahy got his name on buildings after earmarking your tax dollars and every dime of it was borrowed against our national

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SUMMARY – By embracing earmarks, Republicans fumbled the first opportunity to distinguish themselves from big-spending Democrats. 

Speaker Kevin McCarthy doesn’t request earmarks himself but allowed a secret caucus vote to bring them back.

It’s time for a public, on-the-record, up or down vote on earmarks in the United States House of Representatives. Would all 158 earmark-loving Republicans stick with their secret vote?

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THE REBIRTH OF EARMARKS IS A STATEMENT FAR MORE DEVASTATING THAN THE NUMBERS:

• It is a statement of the culture within Congress.
• A culture that shows no respect for your tax dollars.
• No respect for the lurking danger the exploding federal debt poses for our country.

IF OUR GREAT COUNTRY IS TO SURVIVE, THE CULTURE WILL HAVE TO CHANGE.…

THOMAS W. SMITH – Chairman, OpenTheBooks.com

ADAM ANDRZEJEWSKI – CEO & Founder – OpenTheBooks.com

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To Washington Republicans: The federal debt is a national security issue. It is discouraging enough to see you joining in with Democrats to indiscriminately run up the national debt another $16 billion round of earmarks…

But what is far worse – you have no politically-feasible strategic plan to get America’s exploding debt load back under control.

You could get your credibility back and give voters a reason to support you if you did have a credible solution to America’s debt crisis.

Main Street America Republicans have that very solution.

The Leviticus 25 Plan – An Economic Acceleration Plan for America 2024

Economic Scoring links:

·  The Leviticus 25 Plan 2023 – $583 billion Federal Budget Surpluses (2023-2027), Part 1: Overview, Deficit Projection

·  The Leviticus 25 Plan 2023 – $583 Billion Federal Budget Surpluses Annually (2023-2027), Part 2: Federal Income Tax and Means-Tested Welfare Recapture Benefits.

·  The Leviticus 25 Plan 2023 – $583 Billion Federal Budget Surpluses Annually (2023-2027), Part 3: Medicaid/CHIP and Medicare Recapture Benefits

·  The Leviticus 25 Plan 2023 – $583 Billion Federal Budget Surpluses Annually (2023-2027), Part 4: VA, TRICARE, FEHB, SSDI Recapture Benefits

·  The Leviticus 25 Plan 2023 – $583 Billion Federal Budget Surpluses Annually (2023-2027), Part 5: Subtotals, Interest Expense Savings, Summary

The Governmental Accountability Office has stated that America’s ongoing debt crisis is unsustainable.

It is time for America to initiate a bold, new plan.  Our future depends upon it.

The Leviticus 25 Plan – loaded up and ready to launch.

The Leviticus 25 Plan is a dynamic economic initiative providing direct liquidity benefits for American families, while at the same time scaling back the role of government in managing and controlling the affairs of citizens.  It is a comprehensive plan with long-term economic and social benefits for citizens and government.

The inspiration for this plan is based upon Biblical principles set forth in the Book of Leviticus, principles tendering direct economic liberties to the people.

The Leviticus 25 Plan – An Economic Acceleration Plan for America

$90,000 per U.S. citizen – Leviticus 25 Plan 2023 (10440 downloads)

Website: https://leviticus25plan.org/

BNP Paribas is the largest bank in the Eurozone and 10th largest bank worldwide. This French financial behemoth is headquartered in Paris, with global headquarters in London.  It owns subsidiaries all over the world, including BankWest in the U.S..

BNP was a major recipient of U.S taxpayer funds courtesy of the Federal Reserve and U.S. Treasury Department during the financial crisis years – to help restore them to ‘financial health.’ BNP has been involved in some distinctly ‘shady’ (and blatantly illegal) schemes in the past. They have recently ‘rolled the dice’ on an $80 million derivatives trade – and came up empty…

ZeroHedge (Feb 6, 2019): BNP lost $80 million in S&P500-linked derivative trades around Christmas; the massive trading loss emerged after Antoine Lours, BNP’s head of US index trading, put on positions on the S&P 500 which then quickly started losing money.

“BNP Paribas escaped the 2007–09 credit crisis relatively unscathed reporting a €3 billion net profit for the year of 2008, and €5.8 billion for 2009.” (Source: Wikipedia)

Thanks in no small part to U.S. taxpayers…

Background – Exhibit A:

Zero Hedge  Feb 13, 2014:  US Taxpayer “Bailed Out” BNP Paribas Probed By DoJ & Fed “TARP Recipient BNP Paribas got $4.9bn of bailouts from the U.S. Taxpayer – Today, as the WSJ reports we learn BNP Paribas has been funding transactions in Iran, Syria and other countries subject to U.S. Sanctions since 2002. The bank set aside $1.1 billion to settle investigations by the Department of Justice and the Federal Reserve but as the NY Times reports, investigations are playing out on multiple fronts – centering on whether the firm did “a significant amount” of business in “blacklisted” countires (and routed the deals through the US financial system).”

Via WSJ,  –  “…an internal probe conducted over the past few years “a significant volume of transactions” between 2002 and 2009 that could be “considered impermissible under U.S. laws and regulations...” “involving entities that were doing business in U.S.-sanctioned countries, such as Iran, Cuba, Sudan and Libya during the 2002 to 2009 period.

“BNP Paribas SA on Thursday became the latest bank to disclose the extent of its litigation problems in the U.S., saying it has set aside $1.1 billion against potential penalties related to transactions in countries under sanctions...

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Background – Exhibit B:                    

BNP Paribas Sued by US Over Banker’s Alleged Role in Fraud 

Oct. 19, 2011 (Bloomberg) — “BNP Paribas SA was sued by the U.S. over allegations the Paris-based bank aided a grain export fraud scheme involving commodity payment guarantees provided by the Department of Agriculture.

A corporate banker in BNP’s Houston office allegedly helped a scheme that defrauded the Agriculture Department of at least $78 million through deals he made with four U.S. grain exporters, according to a complaint filed yesterday in federal court in Houston.”

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Bloomberg  Nov 28, 2011  –  #18 recipient of Fed’s “secret liquidity lifelines”

“The credit crisis accelerated after BNP Paribas SA, France’s biggest bank, announced in August 2007 that it would halt withdrawals from three funds because mortgage-market turmoil “made it impossible” to value certain assets. BNP began taking Federal Reserve loans in December 2007 when the Term Auction Facility opened. By April 2008, its Fed debt reached $29.3 billion. In 2009, BNP became the euro region’s largest bank by deposits, purchasing Brussels-based Fortis’s units in Belgium and Luxembourg for 10.4 billion euros ($15.2 billion). It issued 5.1 billion euros of preference shares to the French government in March 2009, and reimbursed the state by October. In December 2010, when the Fed disclosed the loans, BNP said it used the TAF “to assist in recycling and facilitating liquidity.”

Peak Amount of Debt on 4/18/2008:  $29.3B

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BNP Paribas received $4.9 billion in TARP funds from the U.S., and they went on to rake in a tidy $29.3 billion credit extension from the Fed via the Term Auction Facility… “to assist in recycling and facilitating liquidity.”

They were meanwhile funding significant transactions (Bloomberg) “involving entities that were doing business in U.S.-sanctioned countries, such as Iran, Cuba, Sudan and Libya during the 2002 to 2009 period.”  And they ran a “grain export fraud scheme” which ‘cooked’ the U.S. Department of Agriculture for a cool $78 million.

Begging the question:  If BNP Paribas is deserving of direct liquidity infusions from the U.S. government and the Fed, then would it not be perfectly reasonable for U.S. citizens to also qualify for their own direct liquidity extensions “to assist in recycling and facilitating liquidity” at the family level.

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The Leviticus 25 Plan is the most powerful and dynamic economic acceleration plan in the world – delivering citizen-driven economic growth and citizen-centered healthcare.

The inspiration for this plan is based upon Biblical principles set forth in the Book of Leviticus, principles tendering direct economic liberties to the people.

The Leviticus 25 Plan – An Economic Acceleration Plan for America

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Following the Covid lockdowns, supply chain issues, rising inflation, ‘tapped out’ consumers – America’s Small Businesses are in desperate need of a fresh start.

Bankrate.com, Sep 18, 2023:

• Statistics vary, but between 55 percent to 63 percent of Americans are likely living paycheck to paycheck.
• Three in four Americans who earn less than $50,000 are living paycheck to paycheck, compared to roughly two in three of those making $50,000 to $100,000.
• Paycheck-to-paycheck living can result in missed or late payments, which can cause your credit score to drop — leading to fees, penalties, higher financing costs and difficulty qualifying for future credit.

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Frequently Asked Questions About Small Business 2023

Small Business Office of Advocacy

Mar 7, 2023: There are 33,185,550 small businesses in the United States. Small businesses employ 61.7 million Americans, totaling 46.4% of private sector employees.

From 1995 to 2021, small businesses created 17.3 million net new jobs, accounting for 62.7% of net jobs created since 1995.

Small businesses are the lifeblood of the U.S. economy: they create two-thirds of net new jobs and drive U.S. innovation and competitiveness

………………………….

Pendulummag.com: It’s tough to do business in an environment where the input costs are constantly rising, and revenue is not keeping pace.

At best, it means slimmer margins for business owners. At worse, it means no margins or even being in the red.

A survey conducted last summer that involved 4,392 small business owners with fewer than 50 employees in the United States showed that 47% of these businesses were at risk of closing. Of the various industries surveyed, the most at-risk businesses are those in the retail, construction, and restaurant industries. I think we can agree that the business environment hasn’t improved in 2023, given the stickiness of inflation and how interest rates have continued to go up.

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The U.S. Department of Treasury, The Federal Reserve, and Washington Democrats and Republicans have no credible plan to reduce America’s staggering debt load, re-ignite economic growth, restore economic liberty, and brighten the future for America’s 33 million small businesses and their 61.7 million employees..

Main Street America Republicans do have a plan – the most powerful economic acceleration plan in the world.\

The Leviticus 25 Plan is a dynamic economic initiative providing direct liquidity benefits for American families, while at the same time scaling back the role of government in managing and controlling the affairs of citizens.  It is a comprehensive plan with long-term economic and social benefits for citizens and government.

The inspiration for this plan is based upon Biblical principles set forth in the Book of Leviticus, principles tendering direct economic liberties to the people.

The Leviticus 25 Plan – An Economic Acceleration Plan for America

$90,000 per U.S. citizen – Leviticus 25 Plan 2023 (9166 downloads)

Moody’s Cuts USA’s Aaa Rating Outlook To ‘Negative’; Treasury Dept “Disagrees”

ZeroHedge, Nov 10, 2023 – Excerpts;

…. After a disastrous 30Y bond auction this week, a collapse in Treasury market liquidity, and an accelerating rise in the market’s perception of the United States’ credit risk, Moody’s has just cut its outlook on US credit ratings to negative from stable.

The key driver of the outlook change to negative is Moody’s assessment that the downside risks to the US’ fiscal strength have increased and may no longer be fully offset by the sovereign’s unique credit strengths.

In the context of higher interest rates, without effective fiscal policy measures to reduce government spending or increase revenues, Moody’s expects that the US’ fiscal deficits will remain very large, significantly weakening debt affordability.

Continued political polarization within US Congress raises the risk that successive governments will not be able to reach consensus on a fiscal plan to slow the decline in debt affordability.

Moody’s does affirm the Aaa rating:  The affirmation of the Aaa ratings reflects Moody’s view that the US’ formidable credit strengths continue to preserve the sovereign’s credit profile…

ABSENT POLICY ACTION, FISCAL STRENGTH WILL DECLINE:  The sharp rise in US Treasury bond yields this year has increased pre-existing pressure on US debt affordability. In the absence of policy action, Moody’s expects the US’ debt affordability to decline further, steadily and significantly, to very weak levels compared to other highly-rated sovereigns, which may offset the sovereign’s credit strengths…

Moody’s expects federal interest payments relative to revenue and GDP to rise to around 26% and 4.5% by 2033, respectively, from 9.7% and 1.9% in 2022. These projections factor in Moody’s expectation of higher-for-longer interest rates, with the average annual 10-year Treasury yield peaking at around 4.5% in 2024 and ultimately settling at around 4% over the medium term. The debt affordability forecasts also take into account Moody’s expectations that, absent significant policy changes, the federal government will continue to run wide fiscal deficits of around 6% of GDP near term and to around 8% by 2033, the widening being driven by higher interest payments and aging-related entitlement spending.

By comparison, deficits averaged around 3.5% of GDP from 2015-2019. Such deficits will raise the US federal government’s debt burden to around 120% of GDP by 2033 from 96% in 2022. In turn, a higher debt burden will inflate the interest bill.

For a reserve currency country like the US, debt affordability – more than the debt burden – determines fiscal strength. As a result, in the absence of measures that limit the size of fiscal deficits, fiscal strength will increasingly weigh on the US’ credit profile.

FISCAL RISKS ARE EXACERBATED BY ENTRENCHED POLITICAL POLARIZATION UNDERSCORING RISING POLITICAL RISK:  At a time of weakening fiscal strength, there is an increased risk that political divisions could further constrain the effectiveness of policymaking by preventing policy action that would slow the deterioration in debt affordability. These risks underscore rising political risk to the US’ fiscal position and overall sovereign credit profile.

Recently, multiple events have illustrated the depth of political divisions in the US: renewed debt limit brinkmanship… In Moody’s view, such political polarization is likely to continue. As a result, building political consensus around a comprehensive, credible multi-year plan to arrest and reverse widening fiscal deficits through measures that would increase government revenue or reform entitlement spending appears extremely difficult.

While the US’ Aaa rating takes into account relative weaknesses with regards to the quality of the country’s legislative and executive institutions and fiscal policy effectiveness compared to other Aaa-rated sovereigns, there is a risk that these weaknesses take greater credit relevance because the deteriorating debt affordability trend would call for a more significant and effective fiscal policy response.

In particular, the US’ lack of an institutional focus on medium-term fiscal planning, either through legislated fiscal rules aimed at improving the fiscal balance or general bipartisan consensus on the need for fiscal consolidation, is fundamentally different from what is seen in most other Aaa-rated peers such as in Government of Germany (Aaa stable) and Government of Canada (Aaa stable).

Meanwhile, the more short-term focus of US fiscal policymaking, along with limited fiscal flexibility – because a very large portion of nondiscretionary budgetary spending is on mandatory entitlement programs and debt service (around 75% of total outlays), exacerbates already fractious bipartisan politics around a relatively disjointed and disruptive budget process. As annual debt service costs continue to rise, fiscal flexibility will diminish even further.

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Again, from Moody’s…:

“Continued political polarization within US Congress raises the risk that successive governments will not be able to reach consensus on a fiscal plan to slow the decline in debt affordability.“

And… :

“In Moody’s view, such political polarization is likely to continue. As a result, building political consensus around a comprehensive, credible multi-year plan to arrest and reverse widening fiscal deficits through measures that would increase government revenue or reform entitlement spending appears extremely difficult.“

And…:

“Meanwhile, the more short-term focus of US fiscal policymaking, along with limited fiscal flexibility – because a very large portion of nondiscretionary budgetary spending is on mandatory entitlement programs and debt service (around 75% of total outlays), exacerbates already fractious bipartisan politics around a relatively disjointed and disruptive budget process. As annual debt service costs continue to rise, fiscal flexibility will diminish even further.“

Washington Republicans and Democrats have no clue, and no credible plan to address America’s developing debt tsunami.

Main Street America Republicans do have a plan – which will “increase government revenue,” and generate massive annual budget surpluses… and “reform entitlement spending.”

It is loaded up and ‘ready to launch.’

The Leviticus 25 Plan is a dynamic economic initiative providing direct liquidity benefits for American families, while at the same time scaling back the role of government in managing and controlling the affairs of citizens.  It is a comprehensive plan with long-term economic and social benefits for citizens and government.

The inspiration for this plan is based upon Biblical principles set forth in the Book of Leviticus, principles tendering direct economic liberties to the people.

The Leviticus 25 Plan – An Economic Acceleration Plan for America

$90,000 per U.S. citizen – Leviticus 25 Plan 2023 (8901 downloads)

Endgame: Interest On US Debt Skyrockets Above $1 Trillion For The First Time Ever

ZeroHedge, Nov 09, 2023 – Excerpts:

Back in July… we warned that the debt Rubicon was about to be crossed and “US Debt Interest Payments Are About To Hit $1 Trillion.”

Fast forward to today when the endgame has apparently arrived: according to the Treasury’s own calculations, total interest is now over $1 trillion (or $1.027 trillion to be precise).

We calculated this by multiplying the average interest rate on marketable US Treasury debt (which according to the Treasury is 3.096% as of Oct 31) by the $26.003 trillion in marketable US debt (as of Oct 31) which nets off to $805 billion, and adding to this non-marketable debt interest (which as of Oct 31 was 2.884% multiplied by the amount of non-marketable debt which is $7.696 trillion) and which in turn is an additional $222 billion in interest. Add across and you get $1.027 trillion.

Naturally, this calculation of estimated real-time interest costs – which is entirely based on Treasury data – is different than what the Treasury actually paid. Interest costs in the fiscal year that ended Sept. 30 ultimately totaled $879.3 billion, up from $717.6 billion the previous year and about 14% of total outlays, however that number is merely lagging what the pro forma print currently is, and will inevitably catch up to it, and then lag on the other side even as pro forma interest payment start dropping (once interest rates plunge after the next QE/YCC is launched).

Fans of exponential functions, we got you covered: the unprecedented surge in both interest rates and interest expense in the past two years means that total US interest has doubled since April 2022 and that’s with the inherent lag in interest catch up – as a reminder, the vast majority of 5, 7, 10 and 30 year debt is still locked in at much lower interest rates, and as such, rates will continue to rise as all of the existing debt rolls into much higher rates over the coming years.

Looking ahead, the staggering surge in both yields and total long-term Treasuries in recent months confirms the government will continue to face an escalating interest bill….

Nov 9, 2023: Total US Debt is now $33.649 trillion, up $58 billion in one day and up $604 billion in one month… up $20 billion every day, up $833 million every hour…

At this rate US debt will be $41 trillion in one year. https://t.co/tOrhqmkFXL pic.twitter.com/UfYOluX1Bq — zerohedge (@zerohedge) October 18, 2023

… bringing the total to $33.6 trillion, more than the combined GDPs of China, Japan, Germany, and India.

And just to show you how terrifying it is about to get, BofA’s Michael Hartnett notes that “the CBO projects that US government debt will rise by $20 trillion next 10 years, or $5.2 billion every day or $218 million every hour!”

Some more context: total world debt (government, corporate & household) hit a record $227tn in Q1’23, double from $110tn in 2007 & $0.5tn in 1952…

As Bloomberg’s Mark Cudmore concludes, the worsening metrics may “reignite debate about the US fiscal path amid heavy borrowing from Washington. That dynamic has already helped drive up bond yields, threatened the return of the so-called bond vigilantes and led Fitch Ratings to downgrade US government debt in August.“

Finally … the US treasury market was this close to collapse as recently as last week, and if it hadn’t been for some clever language and sleight-of-forward-guidance by the Treasury, in the latest TBAC statement, the endgame for US debt would now be in play. For now, however, it has been merely delayed.

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“Heavy Washington Borrowing” and “Skyrocketing” Interest Payments – Solved:

The Leviticus 25 Plan – An Economic Acceleration Plan for America

$90,000 per U.S. citizen – Leviticus 25 Plan 2023 (8900 downloads)

Washington Republicans, tapping the ‘generosity’ brakes – have no alternative plan.

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2.9 Million Borrowers Pay Nothing In Biden’s ‘Most Generous Ever’ Student Loan Repayment Plan

ZeroHedge, Nov 09, 2023 | Authored by Bill Pan via The Epoch Times (emphasis ours) Excerpts:

Nearly 5.5 million federal student loan borrowers have enrolled in what the Biden administration calls “the most generous” repayment option ever offered, federal officials said on Wednesday.

The repayment plan, dubbed the Saving on Valuable Education (SAVE) plan, went into effect in August as part of President Joe Biden’s regulatory effort to dramatically reduce monthly obligations for student borrowers who aren’t earning very much, with many borrowers seeing their bills shrink to practically nothing.

According to the latest update from the U.S. Department of Education, about 2.9 million of the SAVE plan’s current enrollees have incomes that are low enough that they have monthly payments of $0.

The updated SAVE enrollment figure includes 1.8 million borrowers who have newly signed up for the program, as well as another 364,000 borrowers who were automatically switched to SAVE because they had already been in one of the existing income-driven repayment (IDR) plans that the Biden administration seeks to replace with SAVE….

Overall, borrowers are repaying $300 billion in federal student loans on the plan. That represents about 19 percent of the $1.6 trillion in outstanding debt from the federal student loan portfolio.

One of the biggest differences between the SAVE plan and IDR plans is that the amount of income incurring no charge, or protected income, rises from 150 percent above the federal poverty guidelines to 225 percent. Under the SAVE plan, payment also drops from 10 percent of the difference between earnings and protected income to 5 percent.

In practice, this means a single person who earns less than $32,800 a year is required to pay $0 a month. The same applies to a family of four that has an annual income less than $67,500.

On top of all that, under the SAVE plan, borrowers will see their remaining loan balances wiped out after 10 years of repayments. By comparison, it takes 20 or 25 years under IDR for borrowers to get their remaining debt canceled.

“I’m thrilled to see that in less than three months, nearly 5.5 million Americans in every community across the country are taking advantage of the SAVE Plan’s many benefits, from lower monthly payments to protection from runaway student loan interest,” U.S. Secretary of Education Miguel Cardona said in a statement on Monday, promising to “not rest” in the efforts to “make paying for college more affordable.”

Biden Plan Faces Republican Challenge – The SAVE plan is expected to cost billions in taxpayer dollars, a point Republican lawmakers have been emphasizing since the plan’s announcement.

Estimates vary widely, but one analysis by the University of Pennsylvania’s Wharton School suggests that the plan will cost about $475 billion in a span of 10 years.

“About $200 billion of that cost will come from payment reduction for the $1.64 trillion in loans already outstanding in 2023,” the analysis read.

According to the leading business school, the SAVE plan will be incentivizing college students to collectively borrow billions more dollars every year in the next decade due to the expectation that they may not have to repay the debt.

“The remainder of the budget cost, or about $275 billion, comes from reduced payments for about $1.03 trillion in new loans that we estimate will be extended over the next 10 years,” it added.

Citing Wharton’s estimates, a group of 17 Republican senators in September introduced a Congressional Review Act (CRA) resolution against the plan. A CRA resolution does not only nullify an existing rule but bans the federal agency from issuing the same rule again unless Congress later passes a new law authorizing the agency to do so.

“It’s incredibly unfair to those who never incurred student debt because they didn’t attend college in the first place or because they either worked their way through school or their family pinched pennies and planned for higher education,” said Sen. Bill Cassidy (R-La.), ranking member of Senate’s education committee.

“Our resolution protects the 87 percent of Americans who don’t have student debt and will be forced to shoulder the burden of the President’s irresponsible and unfair policy,” he added.

Sen. Cassidy is joined by Sens. John Barrasso (R-Wyo.), Mike Braun (R-Ind.), John Cornyn (R-Texas), Mike Crapo (R-Idaho), Steve Daines (R-Mont.), Joni Ernst (R-Iowa), Chuck Grassley (R-Iowa), Cindy Hyde-Smith (R-Miss.), Ron Johnson (R-Wis.), James Lankford (R-Okla.), Cynthia Lummis (R-Wyo.), Roger Marshall (R-Kan.), James Risch (R-Idaho), Tim Scott (R-S.C.), John Thune (R-S.D.), and Thom Tillis (R-N.C.).

A companion CRA resolution was introduced by Rep. Lisa McClain (R-Mich.) in the lower chamber. Both chambers are expected to vote on the Republican-led resolutions in the coming weeks.

In defense of the repayment plan, Mr. Cardona implored lawmakers seeking to undo it to speak with borrowers who are “drowning in debt.”

“We’re hearing from the American people who are drowning in debt and can’t buy a home in the economy because of college costs,” he said during a Sept. 8 interview on CNN. “Those who are vehemently opposed to it have not spoken to their constituents who are drowning, who need support, who need to make higher education more accessible.”

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Student Loan Forgiveness – Round 2

The Democrats’ SAVE Plan will: 1) Help rescue several million college-educated Americans who are “drowning in debt,” 2) Buy votes of millions of college-educated Americans and extended family members for the 2024 election – and years to come; 3) Incentivize college students “to collectively borrow billions more dollars every year in the next decade due to the expectation that they may not have to repay the debt”; (4) Incentivize college students to remain below the income limits after graduation, in order to effectively dodge loan repayment obligations – which will, at the same time, qualify millions of these same college-educated Americans for additional entitlement benefits..

The Democrats’ SAVE Plan will also: 5) Provide NO BENEFITS for those college grads who have worked and saved to pay off their student loan debts; 6) Not only provide NO BENEFITS for young working-class Americans who never went to college, it will also ‘tax’ them to pay the bills on the SAVE Plan for current and future college students; 7) Add hundreds of billions of dollars over the coming 10 years to America’s booming annual deficits.

The Washington Republicans’ resolution against the SAVE Plan will: 1) DO NOTHING to help the millions of college-educated Americans who are “drowning in debt;” 2) DO LITTLE, IF ANYTHING to win votes in 2024 and beyond – and build ‘brand loyalty’ for Republicans; 3) DO NOTHING to reincentivize responsibility to borrowing agreements; 5) DO NOTHING to reduce dependence on government and shrink entitlement rolls; 6) PROVIDE NO TANGIBLE BENEFITS for the millions of college-grads / extended family members who did successfully pay back their student loans, and PROVIDE NO TANGIBLE BENEFITS for the hundreds of millions of working-class Americans who never went to college.

And finally…

The Washington Republicans’ resolution against the SAVE Plan will DO NOTHING to resolve America’s burgeoning debt crisis – in any meaningful way.

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Meanwhile...

Main Street America Republicans also have a plan.

Once unleashed, this plan will: 1) Provide dynamic tangible financial rewards, and massive debt-elimination benefits for all hard-working, tax-paying U.S. citizens who wish to participate; 2) Build ‘brand loyalty’ and attract voters for 2024 and years beyond; 3) Reduce dependence on government and restore economic liberty in America; 4) Generate $619.5 billion budget surpluses each of the first five years of activation; and 5) Pay for itself entirely over the succeeding 10-25 years.

The Leviticus 25 Plan is a dynamic economic initiative providing direct liquidity benefits for American families, while at the same time scaling back the role of government in managing and controlling the affairs of citizens.  It is a comprehensive plan with long-term economic and social benefits for citizens and government.

The inspiration for this plan is based upon Biblical principles set forth in the Book of Leviticus, principles tendering direct economic liberties to the people.

The Leviticus 25 Plan – An Economic Acceleration Plan for America

$90,000 per U.S. citizen – Leviticus 25 Plan 2023 (8898 downloads)

Treasury Borrowing Running At Crisis-Era Levels

ZeroHedge, Nov 06, 2023 – Excerpts:

With the November quarterly refunding announcement now in the rearview mirror, we look to the Treasury’s borrowing outlook in historical context….

[According to] Deutsche Bank rate strategist Steven Zeng who on Friday published a chart that takes the numbers from the Treasury’s sources and uses table with adjustments to remove the fluctuations in the TGA…. the Treasury borrowed $1.01 trillion during Q2’23, with $756bn used for financing the deficit and QT, and $254bn was “saved” in the form of a higher cash balance.

In this light, Zeng notes that the Treasury’s expected borrowing for the current and the next quarter is actually larger than Q3’s, growing by about $10 billion per month. In fact, Treasury borrowing is now on par with levels during the 2020-2021 pandemic with both weaker fiscal positions and Fed QT are contributing factors.

As Zeng puts it, “with a growing view that the Fed may lengthen the duration of QT, and annual deficits projected at around $1.7- $1.8 trillion over the next few years, these issues are unlikely to go away soon.” At the same time, the widening mismatch between supply and demand for Treasuries could exacerbate the issue through increased debt interest expenses.

Goldman has some even more disturbing numbers: according to the bank’s rates strategist Praveen Korapaty, his outlook for Treasury supply in 2024 shows net notional issuance of $2.4 tr, which is inclusive of both bills and coupons. Gross coupon issuance would be much larger, roughly $4.2 tr, which includes issuance to cover maturing debt.

These concerns will remain in the forefront in 2024, with the TBAC highlighting this week the linkage between term premium and fiscal sustainability…

The thing about Wall Street is that if everyone agrees to stick their head in the sand and ignore the elephant in the room, it’s easy to do.

The problem is when someone notices the elephant. That’s what the TBAC did today pic.twitter.com/mJLbzvbpD0 | — zerohedge (@zerohedge) November 2, 2023

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It is time to kickoff America’s ‘elephant roundup’ ...

The Leviticus 25 Plan will generate, conservatively, $619.5 billion budget surpluses annually in its first five years of activation.

The Leviticus 25 Plan is a dynamic economic initiative providing direct liquidity benefits for American families, while at the same time scaling back the role of government in managing and controlling the affairs of citizens.  It is a comprehensive plan with long-term economic and social benefits for citizens and government.

The inspiration for this plan is based upon Biblical principles set forth in the Book of Leviticus, principles tendering direct economic liberties to the people.

The Leviticus 25 Plan – An Economic Acceleration Plan for America Leviticus 25 Plan 2023 (8623 downloads)

This “Unprecedented” Fiscal Doom Loop Is Getting Worse

ZeroHedge, Oct 24, 2023 | Submitted by QTR’s Fringe Finance

Excerpts:

Lawrence Lepard; US FISCAL DOOM LOOP GETS WORSE

In our view, the biggest elephant in the room is the US Fiscal Doom Loop. To refresh: US Government spending is out of control, and there appears to be very little political will to stop it. As the chart below shows, Government spending is up 14% yoy and tax receipts are down 7% yoy.  Fiscal year ended September 2023 is projected to have a deficit of over $2 Billion (or roughly 8% of GDP). In the past, deficits of this magnitude only materialized during significant downturns like the bursting of the Dotcom Bubble, the 2008 GFC and the COVID crisis. It is unprecedented to have deficits of this magnitude with the economy and employment being relatively strong.

One can only imagine where the deficit goes when the FED’s monetary jihad of rapid rate increases tips the economy over. Past economic downturns typically have increased the deficit/GDP ratio by 8-14%.  

So as the economy moves into recession in 2024 (as we believe), the US could be looking at deficits as high as 20% of GDP ($5 Trillion) if the economy slows dramatically. 

The reason we see it as a “doom loop” is that the current $33.5 Trillion of Federal Debt is continually costing more to service.¹  The Fed’s rapid increase of interest rates, and elimination of Quantitative Easing  (e.g., Fed buying Treasury bonds) has impacted US Treasury interest costs. Note below how interest payments have soared over the past two years.

Interest expense on the Federal Debt now exceeds our substantial annual national defense spending of $816B as well as every other category except Social Security and Medicare.

The Doom Loop occurs as higher interest costs drive higher deficits, forcing the Government to sell more bonds to finance the same. Ceteris paribus, more bond sales lead to higher interest rates which then increase the deficit further. Repeat until there is no market for the bonds. Of course, at that point the Fed is forced to step in and become the buyer of last resort for the bonds to keep the bond market functioning.

The fundamental issue is that without growing the money supply, there is not enough capital to support the inflated bubble valuations. When the Fed chose violence and went on a campaign of rapid rate increases (taking the Fed funds rate from 0.25% in 2021 to 5.25% today), coupled with the sale of some of its bond portfolio (Quantitative Tightening), it increased the cost and reduced the supply of capital necessary to support all financial markets. Government bond sales (which drive rates higher) are crowding out the debt markets. This is going to have to change or the financial markets as we know them are going to collapse. The only issue is the time scale.  The subject is addressed nicely in the chart below by Lyn Alden:

As you can see, when any person, company or government takes on massive leverage, the proceeds better generate productive economic outcomes to support the debt. (e.g., levering to invest in education or nuclear plants has a payback, but if the money is used to finance War, virtually nothing is gained/produced). Thus, to support an over-levered entity, more financing or money supply growth is required. When markets enter chaotic times, like in 2008-2013 and 2018-2021, the Fed is forced to be very aggressive in growing the monetary base via expansion of their balance sheet (money printing). This is what has taken the Fed Balance Sheet Assets from $800B to roughly $8T in the past 15 years. With debt continuing to grow rapidly we see no reason why this will not occur again, perhaps in short order.

The Fed’s recent retrenchment in the Base Money Supply (orange line in the chart above) began in February of 2022. There is a lag effect in terms of its impact on the economy. We believe the lag is now starting to bite hard and that is showing up in the numbers as we will detail below.

EVIDENCE OF ECONOMIC SLOWDOWN – Despite recent Wall Street and CNBC cheerleading, we believe the economy is beginning to roll over.

Post COVID, consumers regained confidence and went on a spending spree to maintain their lifestyles despite inflation and rising living costs. They did this by significantly increasing their borrowing on credit cards as seen in the chart below:

What is not shown on this chart is the average interest rate on these credit cards. Five years ago, the average interest rate on these cards was 13%. Today that rate is 22% – a significant burden for consumers carrying credit card balances. These higher costs have had an impact on consumer behavior and as the next chart shows credit card spending dropped sharply in September.

And as the following chart shows, total consumer spending has been dropping significantly year over year in 2023, and the trend is getting worse.

Further, signs of an imminent recession include the level of bank credit growth. The last time it was this negative was in the 2008 GFC. Negative bank credit growth is a very reliable recession indicator.

We believe the economy is very sick. The doctored employment figures are not telling the true story.

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America needs a dynamic new, ‘outside-the-box’ resolution to this burgeoning economic crisis, a debt-busting behemoth economic acceleration plan.

The Leviticus 25 Plan is loaded up and ready to launch.

The Leviticus 25 Plan is a dynamic economic initiative providing direct liquidity benefits for American families, while at the same time scaling back the role of government in managing and controlling the affairs of citizens.  It is a comprehensive plan with long-term economic and social benefits for citizens and government.

The inspiration for this plan is based upon Biblical principles set forth in the Book of Leviticus, principles tendering direct economic liberties to the people.

The Leviticus 25 Plan – An Economic Acceleration Plan for America

$90,000 per U.S. citizen – Leviticus 25 Plan 2023 (8623 downloads)

Washington Democrats have an economic plan: Socialism expansion, debase the Dollar, migrate to MMT economics, roll the U.S. economic system into the coming ‘Central Bank Digital Currency’ new world order, and subvert the individual rights and liberties of all Americans.

Washington Republicans have ‘no credible plan’ … other than to lightly ‘tap the brakes’ on the Democrats’ broader socialization mission and goals.

Washington Republicans have priceless opportunity at this very moment to get America’s exploding deficits back under control, solve the ongoing the budget battles / government shutdown deadlines, restore economic liberty, and get America back on track. Shamefully… they have no plan.

Congress Has 5 Days To Avert A Shutdown | Down to the wire once again…  Nov 13, 2023 – ZeroHedge

………..

No Surprise, House Speaker Johnson Proposes Same Plan as McCarthy | There are likely big surprises elsewhere, but there is no surprise in this corner regarding Johnson’s plans to keep the government running.  Nov 13, 2023 – ZeroHedge

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The Federal Reserve also has no plan to stabilize the financial system, avert a looming Treasury auction crisis, insure long-term strength and stability for the U.S. Dollar, and reignite economic growth.

The Fed Has No Plan, And Is Just Hoping For The Best | There is no long-term thinking here about building a sound economy, fostering investment, or helping the working man save for retirement. The Fed’s concern is keeping up appearances…   Nov 12, 2023 – ZeroHedge

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There’s A “Crisis Brewing”: Powell & Piss-Poor Auction Spark Chaos In Credit Markets, Crypto Soars | Nov 9, 2023 – “…this is a shitshow, liquidity is disastrous and the auction is the canary in the coalmine…” – ZeroHedge

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Washington Republicans are once again playing out a ‘losing hand’ with voters in this ongoing game of budget roulette. 

Washington Republicans wasting a golden opportunity, a once in a generation moment, to present a dynamic new winning plan for America – one that would put an end to these revolving-door debt ceiling impasses once and for all – and deliver a powerful debt-elimination strategy across all sectors of the U.S. economy, with major financial security gains for working Americans.  A plan that will strengthen America’s long-term national security interests.

Main Street America Republicans have just such a plan – loaded up and ready to launch.

The Leviticus 25 Plan economic acceleration plan that will provide a dynamic ‘recharge’ to the U.S. economy, generate meaningful budget surpluses, reestablish citizen-centered healthcare, and restore economic liberty in America. 

It will “unleash a new wave of prosperity” in America.

The Leviticus 25 Plan will generate $619 billion federal budget surpluses for the initial 5 years of activation (2024-2028), and completely pay for itself over the succeeding 10-15 years.

The Leviticus 25 Plan is a powerful economic initiative providing direct liquidity benefits for American families, while at the same time scaling back the role of government in managing and controlling the affairs of citizens.  It is a comprehensive plan with long-term economic and social benefits for citizens and government.

The inspiration for this plan is based upon Biblical principles set forth in the Book of Leviticus, principles tendering direct economic liberties to the people.

The Leviticus 25 Plan – An Economic Acceleration Plan for America 2023

Economic Scoring links:

·    The Leviticus 25 Plan – 2024 Generates $619.5 billion Federal Budget Surpluses (2024-2028) Part 1: Overview, Deficit Projection

·    The Leviticus 25 Plan Generates $619.5 Billion Federal Budget Surpluses Annually (2024-2028). Part 2: Federal Income Tax Recapture; Economic Security / Means-Tested Welfare Recapture.

·    The Leviticus 25 Plan Generates $619.5 Billion Federal Budget Surpluses Annually (2024-2028). Part 3: Medicaid, Medicare, VA, TRICARE, FEHB, SSDI Recapture.

·    The Leviticus 25 Plan Generates $619.5 Billion Federal Budget Surpluses Annually (2024-2028). Part 4: Interest Expense Recapture, Totals Summary

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The Leviticus 25 Plan – An Economic Acceleration Plan for America 2024

$90,000 per U.S. citizen – Leviticus 25 Plan 2023 (8479 downloads)

Website:  https://leviticus25plan.org/

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Preview 1:

The Leviticus 25 Plan provides a $90,000 credit extension, direct from the Federal Reserve, to every participating U.S. citizen:  $60,000 into a Family Account (FA) and $30,000 into a Medical Savings Account (MSA).

Example:  Qualifying family of four would receive $240,000 in their FA, and $120,000 in their MSA.

Primary goals:  Massive debt elimination at family level: mortgage debt, consumer debt, student loan debt.  Federal budget surpluses.

Eligibility:  U.S. Citizen.  Job history, credit history requirement (similar to traditional credit checks for bank loans).  Clean recent drug history.  Clean crime history.

Requirements:  Forego all federal and state tax refunds for 5-year period.

Forego Economic Security and selected means-tested welfare benefits – for minimum 5-year period.

Forego enhanced federal rental forbearance/assistance – for minimum 5-year period.

Forego SSI and SSDI for minimum 5-year period.

New $6,000 deductible on primary care access to: Medicare, Medicaid, VA, TRICARE, FEHB – for minimum 5-year period.

The Plan assumes that the elite-wealthy will not participate, because their refunds are too valuable to give up over the requisite 5-year period.

The Plan also assumes that many who heavily depend on Economic Security and social welfare benefits will also choose not to participate, because the overriding value of those benefits, vs foregoing them, over the 5-year period.

Preview 2:

The Leviticus 25 Plan grants the same direct access to liquidity, through a Fed-based Citizens Credit Facility, similar to the credit facilities that were created by the Fed to transfuse trillions of dollars in direct transfers and credit extensions to Wall Street’s major banks, credit agencies and insurers during the great financial crisis. 

The following facilities were created and activated by the Fed for this massive Wall Street bail out operation: Term Auction Facility (TAF), Primary Dealer Credit Facility (PDCF), Term Securities Lending Facility (TSLF), currency swap agreements with several foreign central banks,  Commercial Paper Funding Facility (CPFF), Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility (AMLF), Money Market Investor Funding Facility (MMIFF), and the Term Asset-Backed Securities Loan Facility (TALF), and access to the Fed’s Discount Window.

Additional perspective:  SIGTARP, the oversight agency of the Troubled Asset Relief Program (TARP), in its July 2009 report, vetted by Treasury, noted that the U.S. Government’s “Total Potential Support Related to Crisis” (page 138) amounted to $23.7 trillion. While this figure represents a backstop commitment, not a measure of total potential loss, it is nonetheless an astounding degree of support, in the form of liquidity infusions, credit extensions and guarantees, various other forms of assistance for financial institutions and other business entities affected by the financial crisis.

Preview 3:

The Leviticus 25 Plan website has been accessed on one or more occasions by the following financial enterprises/agencies:  JP Morgan, Goldman Sachs, Morgan Stanley, Bank of America, Citigroup, Wells Fargo, State Street, Merrill Lynch, AIG, Barclays Plc, Royal Bank of Scotland, Deutsche Bank, Société Générale S.A, UBS AG, Credit Suisse, BNP Paribas, The U.S. Department of Treasury, General Accountability Office (GAO), The European Central Bank (ECB), Bank of England (BOE), Swiss National Bank (SNB), Bank of Canada, Bank of Montreal, Bank for International Settlements (BIS).

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The General Accountability Office has stated that America’s ongoing debt crisis is unsustainable.

It is time for America to institute a bold, new plan.

The Leviticus 25 Plan is loaded up and ready to launch.  The ‘golden moment’ for Republicans has arrived.