US Ends Fiscal 2016 With $1.4 Trillion Debt Increase: Third Largest In History

Tyler Durden's picture

Submitted by Simon Black of Sovereign Man

The United States government closed out the 2016 fiscal year that ended a few days ago on Friday September 30th with a debt level of $19,573,444,713,936.79.  That’s an increase of $1,422,827,047,452.46 over last year’s fiscal year close.

That debt growth amounts to roughly 7.5% of the entire US economy.  By comparison, the Marshall Plan, which completely rebuilt Western Europe after World World II, cost $12 billion back in 1948, or roughly 4.3% of US GDP at the time.

The initial appropriation for the WPA, perhaps the largest of Roosevelt’s New Deal “make work” programs that employed millions of people, cost  6.7% of US GDP.  And, more recently, the US $700 billion bank bailout at the beginning of the 2008 financial crisis was the equivalent of 4.8% of GDP.  So basically these people managed to increase the national debt by a bigger percentage than the cost of the New Deal, Marshall Plan, and 2008 bank bailout.

What exactly did you get for that money?

Did they spend $1.4 trillion on achieving world peace, eradicating poverty, saving the planet, or some other pipedream?

Did they finally fix America’s crumbling infrastructure that has been in desperate need of repair?

Did they send a gigantic tax refund check to every man, woman, and child in the country?

Actually the answer is (D), none of the above. They squandered it all.

In fact, the 2016 fiscal year had the THIRD largest increase in government debt in US history. The only two previous times in which the debt increased more than the 2016 fiscal year were during the financial crisis.

But there was no financial crisis in 2016.  The government didn’t have to spend hundreds of billions of dollars to bail out the banks.  All things considered, 2016 was a pretty normal fiscal year for the federal government. There were no major emergencies to drain taxpayer funds.

Yet they still managed to blow $1.4 trillion because this level of waste and spending is now baked into the system.

Even if they dramatically slashed spending and got rid of entire departments of the federal government, they would still be hemmhoraging cash at a rate far greater than the economy can now possibly grow.

Social Security and Medicare are now the largest parts of that financial sinkhole, and according to their own projections, their drain on the budget is growing each year.  All other government spending COMBINED pales in comparison to Social Security and Medicare.  So if you add up military spending, homeland security, national parks, and President Obama’s jet, it’s just a fraction of what they spend on Social Security and Medicare.

These programs consume the vast majority of US tax revenue, forcing the government to borrow mind-boggling amounts of money to fund its operations, even in good times.  (Just imagine how much the debt will grow when times get tough again.)

What’s even more crazy is that Social Security and Medicare aren’t even properly funded. Both are rapidly running out of money.  The programs’ annual trustee reports show that their primary trust funds will become completely depleted starting in the next few years.  In fact one of Social Security’s major trust funds for Disability Insurance was actually fully depleted last year.  So even though these programs are already draining taxpayer resources and forcing the government to take on more and more debt, they are in need of a HUGE bailout.

This leaves precisely ONE option: default… but on whom? 

It’s possible the government could try to borrow the $42 trillion that they calculate is necessary to make these programs solvent again.  That seems extraordinarily unlikely.

But even if it were possible to print and/or borrow that much money, it would either create a terminal currency crisis, or force the US government to default on unaffordable interest payments, throwing the financial system into chaos.

The other option is to simply default on the future beneficiaries of these programs, telling people, “Hey sorry, we wasted all of your money and there’s nothing left.”  So their choice comes down to either screwing the banks or screwing the taxpayer.  I wonder which option they’ll pick… 

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remain calm's picture

Bodes well for the future , green shoots

TBT or not TBT's picture

We used to call those fiatscoes, back in the day.

This Might Hurt's picture

The drop in the deficit the past couple years the dems we're bragging about was nothing but a boom induced predictable government windfall explained below. Looks like the party is over.

Squid-puppets a-go-go's picture

This figure is bullshit. Its been sitting at $18-19 Trillion for about 5 years, even though they still add another trillion each year

(thats without the unfunded liabilities added on arguments). Ive been waiting for Tyler to call them out on this but I'm hearing crickets on this one

lance-a-lot's picture

Where is Shylock when you need him?

Occident Mortal's picture

Doesn't matter what the numbers say. They make the law and print the money.

All that matters is that people keep turning up to work, keep shopping, keep paying their bills and behaving according to their rules. All they need to do is keep people believing. In some places in the world society is breaking down and people are killing each other and running around eating human liver. This chaos is spreading to Europe, it is hard to contain.

The numbers will say whatever they need to say to keep everyone conforming to social norms. There is NOTHING behind those numbers. It's all made up. The numbers can be changed to show whatever is required. And they are.

China has finally realised the game and they are building their own superpower built on an illusion of solvency.

The US is a superpower because it doesn't pay for shit. Build a gigantic military and pay for it later. Force everyone else to pay now. Suddenly world domination. But now China is copying this strategy.

Itinerant's picture

Saying that SS is underfunded is crazy. What would funding look like? A big room full of dollar bills?

You can't save up stores of grain or tomatoes for the future, and future generations will not be sending produce back in time to pay. Money is just accounting, a scorecard. In the end, all Social Security is based on intergenerational solidarity. All private pension schemes are also reliant on returns on investments in the future, which means they will be draining consumption from future production. Each generation consumes what it produces. How this is distributed is a matter of policy.

You cannot run out of money, you can only run out of tomatoes or grain. That's why the only way to make social security in the future affordable is to expand society's powers of production. Medicare is a different matter. The medical industry is a rip off which should be fundamentally reformed: actually applying existing law would go a long way.

Sudden Debt's picture

Try 270 trillion 

But officially, it's not a crisis so they just cook the books.

A good example is brasil, suddenly they where bankrupt and everybody tought they where rich.

They knew in advance there wzs fraud... but things where great so why complain...

Untill the bills came through...

And if you compaire Brasil to America you could say that Brazil is a more democratic country then America

And Brazil has a capitalist economy

But besides those differences, America looks a lot like Brasil and will end in the same way.

Countries alsohide their numbers through derivatives, we've seen it from Greece, italy, spain and ireland where goldman sachs showed them how to hide the truth.

Do you think America is honest about it's accounting?


This Might Hurt's picture

They like to talk about windfalls when the want to tax a business not so much when it's a government tax windfall.

GUS100CORRINA's picture




1.) Student Loan Debt - 2 Trillion

2.) America's debt - UP over 100% in 8 years,

3.) America's unfunded liabilities - 150 Trillion plus and climbing rapidly

4.) Corporate Debt - Up over 100% in 8 years.

5.) Bank Derivative Expsosure - Up over 300% in 8 years.

6.) Crime and Violence - Out of Control (Billions in Lost Property, Lives)

7.) America's foreign policy - America now pays ransom to terrorist states like Iran (1,700,000,000)

8.) State and Municiple Pension Shortfall - 6 Trillion plus

9.) Fed Balance Sheet - At 4.5 Trillion - Up Over 400% in 8 years

10.) US Government Cannot Account for 6.5 Trillion in its books.




venturen's picture

wall street bonuses are still enourmous and anyone that had 1/2 Billion 8 years ago is a LOT RICHER! 

hxc's picture

Not if he didn't play the game (ws casino)... or buy metals...

Berspankme's picture

Well at least the dindus are happy   ..... oh.....wait

gatorengineer's picture

I think Dindu is quite happy, they are getting to stick it to whitey.... The NFL is going the way of the NBA, and you can turn on the TV without the black culture being extolled. After all google says you cant be racist and black.

FrankieGoesToHollywood's picture

But they did pay Iran back.  In cash.

TBT or not TBT's picture

The dictatorship they "paid back" is not the same entity to which we supposedly incurred the debt. That country, an ally and modernizing westernizing partner of the USA, died, and had no legitimate heirs. Iran is ruled by psychotic thieves. And that's who the Obama team gave a billion seven in walking around money to

Mustafa Kemal's picture

"modernizing westernizing partner of the USA,}

That modernizing wesernizing partner of the USA was created by a CIA coupe of a moderate democrat Mosadeq. This coup not only had the unfortunate blowback of the creation of the Islamic revolution, since democracy didnt seemed to work out so well.

It also gave birth BP, British Petroleum.

We owe them alot more than that puny debt. 

hxc's picture

Maybe the fuckin idiots running the US banana republic gubmint owe the people unfortunate enough to live in the Iranian banana republic something, but I don't owe anyone shit.

hxc's picture

And a coupe is a kind of car. I usually like your comments too.

Kprime's picture

How much for a CIA Coupe and does it come with whitewalls?

nightwish's picture

But we owe that debt to ourselves, so it can just be written off and go unpaid. 

A liberal troll was making this anile claim on another thread. Apparently money grows on trees to them.

Okienomics's picture

I'm no liberal troll, but I think maybe he's right....

Government spends money it does not have.

Government issues bonds to raise cash.

Banks with excess reserves buy bonds, give cash to gov't.

Banks sell bonds to Fed at a profit.

Fed earns interest.

Fed returns excess interest to Government.

We pay the interest to ourselves.

FIAT CON's picture

There is a massive amount of US debt that is owed to other entities not just the fed and local bankers.

Mustafa Kemal's picture

Interesting how the yearly debt curved changed around 911

Kprime's picture

plus I'm 3 months behind on my water bill and that's another 120; and Johnny Carinos is waiting for me to eat out this month and save their restaurant.

BeanusCountus's picture

Maybe, I suppose. Hey ZH, need to see Sov's source here. Blows out all projections of $600 Bil for year. Not saying he's wrong, but havent seen this anywhere yet. (Which wouldnt surprise cause MSM wouldnt carry anything this bad.) Where is he getting it?

JusticeTBuford's picture

Those are some expense Band-Aids.

Mike in GA's picture

Withe the media complicit in every democrat party move, including the adminstration and congress, these deficits don't matter.  Once an opposition party gets in, they will, if an opposition is found to exist.  Till then, nothing to see here, just another missing trillion or so.

Oldwood's picture

I figured something was up... I got a fraud alert on my Amex card today. Should have known.

pitz's picture

Yet there was a ZH poster who claimed that the Chinese Yuan would collapse if allowed to float against the USD$.  Freakin' amazing.

hxc's picture

Fair point, but do you really trust a mad moneyprinting crony-socialist government with maintaining a stable commodity-based currency?

Seasmoke's picture

$20 Trillion. And still no need for physical Gold. Unreal !!!!!

Am I really going to be sitting here in 8 years saying $40 Trillion. And still no need for physical Gold ??? I'm starting to really think so.

actionjacksonbrownie's picture

A trillion "dollars" will buy a lot of shorts on the crimex.

venturen's picture

yes...well unless those unleashed mobs' of Obama brothers and sisters come to your house...

tarsubil's picture

It has just about doubled every 8 years since 1980 so $40 trillion in 8 years would be a good prediction.

So the credit cycle turns over, more bailouts, more stimulus and the deficit averages $2.4 trillion for the next 8 years. Voila $40 trillion. But rates will be at or below zero so it will be easier to service.

When you can do ma-gic! You can have anything that you desire! Ma-gic!

kappal_toba_dhurr_ne_thook's picture

The real number is about $200 tril if you count in the financed liabilities and the unfinanced liabilities. 

But I digress. Gold is great but you must have it at home or in a safe storage place OUTSIDE of USA and that place must have been secured/account opened with a NON USA passport. When USA economy really goes to hell, and it will, you can bet your Comfortesse Bra that USA government will come after your precious metal holdings regardless of where you store then UNLESS you do what I wrote - keep it abroad preferably in a place secured with a non USA passport. Because even if you keep it in a storage facility abroad, USA government will find a way to rewrite FATCA to get it. 

This, bacha, is a promsie.

Mini-Me's picture

And the deficit using GAAP?  Probably 4x or 5x the $1.4 trillion. 

effendi's picture

The headline is misleading. The US debt did not increase by 1.4 trillion. That is only the headline number at the federal level. Add in unfunded promises (pensions), State debt, County debt, School Board debt etc and the figure is much higher.

Grave's picture

so zionazis robbed another 1.4 trillion, no surprise there

when the world finally grows up and parts with "wealth" worship
there will be a lot of wailing coming from certain groups of psychopaths

jmaloy5365's picture

Don't matter how much debt,  they don't plan on repaying it.

Mustafa Kemal's picture

I think we pay alot of interest on it every year.

Okienomics's picture

The Fed owns a lot of those bonds now.  The Fed retains some of the interest for its operations.  The "excess interest" is returned the Treasury.  Let it sink in.

northern vigor's picture

The fed actually pays dividends back to it's owners...the Rothchilds and some very large banks. 

founthead's picture

That was true sometime ago. After all the QE, ZIRP and unknown/unaccounted losses on their MBS portfolio, it is clear that the FED is going to be making losses in the near future. Hence, the member banks moved to abolish the 6% preferred dividend, and replace it with Interest on Reserves (IOR) and Interest on Excess Reserves (IOER) which is equal to the upper range of the FED rate (currently 0.5%). If and when the FED rate rises, the member banks will make windfall gains, hopefully more than enough to make up for the losses on their UST holdings, and NPLs resulting from higher interest rates.The FED, on the other hand will be left with a huge hole on its balace sheet, to be slowly filled via higher earnings beacuse of higher rates on the USTs - i.e. from the pocket of the Taxpayers. That is when the hidden losses on the MBS holdings will be "socialized". 

nmewn's picture

Everythings fine, seee! Best economy evahhh!

thecondor's picture

Hey nmewn, what do you think would happen if Saudi Arabia dumped the $700+ billion in treasuries like they threaten to do because of the law that was just past allowing US 9/11 victims to sue?

zippedydoodah's picture

Nothing. Nothing to see here. No change. Nada.