Stockman Exposes America's Fiscal Doomsday Machine

Tyler Durden's picture

Authored by David Stockman via,

Maybe the Democrats did win the 2016 election. Or at least the the Deep State and its accomplices among the beltway political class, K-Street lobbies and the media did.

That’s because the media won a giant victory against something they deplore and despise more than anything else - the public debt ceiling. They sanctimoniously admonish that it’s a relic of the nation’s fiscally benighted past. They operate on a belief that this is an episodic tendency to threaten America’s credit and to offer Capitol Hill an opening to grandstand about the fiscal verities is a blight on orderly governance.

So the Donald’s latest burst of impetuosity — agreeing with Sen. Schumer to permanently abolish the public debt ceiling — has descended on the beltway like manna from heaven. Not Barack Obama, Bill Clinton, Jimmy Carter or even the Great Texas Porker, Lyndon Johnson, dared to utter the thought of it — at least not in polite company.

Suddenly, and notwithstanding all the good he has done disrupting the status quo, the Donald has become the foremost enemy of America’s very financial survival.

The Federal budget is a Fiscal Doomsday Machine. The depository of American wars and entitlements have run rampant. Under the pile drivers of a global empire and the retiring baby boom, it is rapidly propelling the nation toward fiscal catastrophe. That grim outcome is virtually guaranteed if the only remaining safety brake — the debt ceiling — is summarily abolished.

Due to entitlements, debt service and the slow pipeline of appropriated spending there is no such thing as an annual Federal budget or accountability for how much Uncle Sam spends and borrows. Instead, the $4.1 trillion that Congressional Budget Office (CBO) projects the Federal government will spend in FY 2018, and the $563 billion it will borrow, reflects the dead hand of the past.

Entitlements and other mandatory spending alone is projected to reach $2.566 trillion or 63% of total FY 2018 outlays.

Another $307 billion will be required for interest on the nation’s $20 trillion public debt, while upwards of half the $1.22 trillion for so-called “discretionary” or appropriated programs also reflects funds appropriated years ago.

Altogether, $3.5 trillion, or 85% of outlays, will be essentially baked into the cake before a single Congressional vote is taken on anything regarding the FY 2018 budget.

The Federal spending machine is almost entirely on autopilot and heading for disaster owing to ballooning populations and debt. Ten years from now the combined cost of mandatory programs and debt service will reach $5.12 trillion compared to just $2.87 trillion during FY 2018.

Entitlement spending will be nearly double — even if Congress took a 10-year recess!

As shown below, that means the Federal spending share of GDP is now inexorably climbing toward 30% owing to baby boom retirements, even as revenue under current law is stuck at about 18% of GDP. The CBO’s latest projection of the widening fiscal gap — soon more than 10% of GDP annually — leaves nothing to the imagination.

America really does have in place a Fiscal Doomsday Machine.

The Fiscal Doomsday Gap Is Uncloseable — The Crisis Is Permanent

1 Federal Spending and Revenues Fiscal Doomsday

In the chart above, it is easy to see why the beltway argument — that we’ve already spent the money and must liquidate by borrowing whatever it takes — is so thoroughly wrong. The tidal forces driving the budget are so enormous and dangerous that some kind of automatic, institutionalized braking force is absolutely necessary.

The fiscal exigencies of empire, demographics and debt have now become insuperable.

In the case of demographics, it is all right here. The baby boom is retiring at a rate of 10,000 per day, and the wave will not crest until there are nearly 100 million Americans over 65 years of age — double today’s 50 million.

Needless to say, at an average cost of $35,000 per year for retirement pensions and medical care alone, the fiscal math becomes prohibitive.

The voting and political math is downright impossible, and has been that way for the last 34 years.

The last time any significant chunk was taken out of social security or medicare benefits was back in 1983 when the Congress did agree to the Greenspan Commission’s proposal to delay the payment date of the Social Security cost of living allowance (COLA) by the grand sum of 90 days on a one-time basis!

There was one other change, that I was personally involved in, that seals the case. Working with Greenspan we had narrowed the benefit cut options down to a binary choice and presented it to the swing vote on the commission. The latter happened to be 88 year-old Claude Pepper — a left-over from the New Deal era and champion of America’s elderly lobby.

Did he want a reduction in early retirement benefits immediately or an increase in the retirement age starting 30 years hence? Apparently, Senator Pepper concluded he would not live to be 118, and choose the second option!

All of that happened when the over 65 population was about 28 million, not 100 million.

2 Elderly Population Growth

There is no plausible scenario in which Congress will proactively and voluntarily address reform for the ballooning population of elderly Americans. It will only happen when action is forced by the debt ceiling mechanism — the equivalent of a credit card cancellation on a national level.

The recent utter failure to do anything at all about ObamaCare and the underlying health care system that is already consuming 18% of GDP only reinforces the case for a fiscal dues ex machina. As seen below, the cost of the medical entitlements alone relative to national income will double from 5% to 10% over the next three decades.

3 Federal Spending on Health Care

Where that leads, of course, is to fiscal catastrophe.

Without a fiscal braking mechanism that is external to voluntary legislative action, the day of reckoning will be catastrophic.

Even by the CBOs own Rosy Scenario based long-term projections, the nation’s public debt ratio is heading for a Greek-style 150% within the next 25 years, and by our own more sober view of the economic future far worse than that.

When Washington descends into complete fiscal disarray, the meltdown will be on and the grim reaper of recession will be just around the corner.

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MillionDollarButter's picture

The media wants the country to go into debt without limit.  That m.o. seems familiar.  Can we throw some immigibs on that?

venturen's picture

many many in the media are morons... I know editors/writers at bloomberg, NYT, Wall Street Journal, CNN, etc They aren't hiring the cream of the crop

HopefulCynical's picture

It's actually not the end of the world. The media always faults Republicans for any shutdown; we saw that the last time. Since the debt ceiling always gets raised and is always a political weapon available exclusively to Marxist Democrats, why keep it?

Cash2Riches's picture

Just keep whistling and twiddling your thumbs. Nothing to see here, nothing is wrong! Meanwhile, the elites continue to push us quietly towards another global economic collapse. There is a reason why experts like Jim Rickards are now ringing the alarm bell. A collapse is coming and it is going to make 2008 look like a walk in the park.

grasha87's picture

I have created a free market currency to help alleviate recessions that the Federal Reserve System has caused:

asteroids's picture

I predict that the best selling book 100 years from now will be "The Decline and Fall of the American Empire". It will be compared and contrasted to the Roman Empire.

fbazzrea's picture

i hope it reveals in the end days how the Fed (spelled One Bank) deployed propaganda, though ultimately in vain, with shills spouting the "new" Fed will solve our problems and America can inflate her troubles away. clearly, this revised Fed will only differentiate from the current Fed by the means in which our runaway governments confiscate their citizens' wealth.

perhaps it will even include the beginning parts where the American people were no longer willing to tolerate national thievery by the elite powerbrokers of their hard-earned money. nor were they willing to abide by the interventions and intrusions upon their privacy and daily lives under threat of incarceration and worse, death. long lists of bodies whom were once alive and only made the fatal mistake of naively believing in truth, liberty and justice for all, not realizing the American way had long been replaced by the empirical American System of Corruption.

no doubt Mr. Gibbon will even gasp at the absurdity of it all.


corporatewhore's picture

I think porn is the way to make more money.

Consuelo's picture



Ya think...?    Was heard to comment nearly (20) years ago regarding such:

'Porn is what powers the internet'

True then.  Probably even more true today.

Joe Davola's picture

Here, I thought it was legalizing all drugs then taxing them.  Oh wait, the CO greenies have figured out ways around the taxes...

OK then, if it's not the lottery and gambling, then it's gonna have to be pron.

Fake Trump's picture

Nude pictures of Yellen, Hillary and Nikki Haley will be a hit. Although nothing to see but people are always curious. 

FredGSanford.'s picture

Nancy Pelosi and Maxine Waters too.

Vlad the Inhaler's picture

Now we're talking.  All of this can be easily solved using a simple PORN TAX!  One penny per click to the US Treasury and we'll be riding high again.

HopefulCynical's picture

That works for me. I never look at any of it. I prefer flesh and blood women, even given the headaches they can bring with them.

Beowulf55's picture


I believe someone said this once:

You can ignore reality but you cannot ignore the consequences of ignoring realilty.


Iconoclast421's picture

If you can profit from ignoring reality then you have plenty of money to spend on propaganda to convince others to ignore reality even when it costs them money!

order66's picture

Stockman has exposed himself as unable to accurately predict/analyze anything.

Consuelo's picture



Welp,  it looks like March, June, August and now September dates have either passed or gettin ready to for David Stockman and his predictions of imminency...

It's gonna happen David, you'll be 'proven' right, along with a gaggle of others too...

But looky here - no 'Date' this time...  

Fake Trump's picture

Fiscal time bomb ticking its way to doomsday.

NYC_Rocks's picture

Yep, nothing new here  It's what you get when we grant special power to a small group of politicians (both right and left).  Congress is a cesspool.  They will just keep borrowing from the Fed who will keep printing.  It's just a backdoor tax to the people.  No need to increase taxes.  Just keep borrowing the printed money.  Inflation will eventually come back and reconcile everything with a collapse of the currency.  Keep diversified.

Clock Crasher's picture

The Federal budget is a Fiscal Doomsday Machine.

Wrong.  0% Gold backed, fractionally reserved, loans out of thin air, debt based monetary system, compounding interest.

Talking about symptoms and not talking about the cause of symptoms. 

donefuhkingaround's picture

nobody talks about this as the start, as the root of the problem - and everyone looks for the answer only not to find it - dumbfounded - when the answer is right in front of their face:

No State shall make any Thing but gold and silver Coin a Tender in Payment of Debts.

Every day, all 535 members of Congress wake up and willfully ignore the law.

Every day, all 9 members of the Supreme Court wake up and willfully ignore the law.

Every day, the President of the United States wakes up and willfully ignores the law.

And many more in the federal govt who have sworn to uphold the Constitution.

Not only the law, but the supreme law of the land – The Constitution – that they all have decided to ignore – every day that they are on the job.

How can any citizen of the U.S. have any faith in any member of the federal govt under this condition?  How can any citizen of the U.S. trust any member of the federal govt do to what is right and just?  Right now we are a “nation of men” and not a “nation of laws” – otherwise known as a “dictatorship”.

U.S. Constitution - Article 1 Section 10

No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.

No State shall, without the Consent of the Congress, lay any Imposts or Duties on Imports or Exports, except what may be absolutely necessary for executing it's inspection Laws: and the net Produce of all Duties and Imposts, laid by any State on Imports or Exports, shall be for the Use of the Treasury of the United States; and all such Laws shall be subject to the Revision and Control of the Congress.


No State shall, without the Consent of Congress, lay any duty of Tonnage, keep Troops, or Ships of War in time of Peace, enter into any Agreement or Compact with another State, or with a foreign Power, or engage in War, unless actually invaded, or in such imminent Danger as will not admit of delay.

gregga777's picture

The political parasites are all corrupt, bribed criminal pieces of shit. I better stop before I write how I really feel about the 535 war criminals in the United States CONgress, the SCOTUS (Supreme Cunts of the United States) and The other parasites infesting the Legislative, Executive and Judicial branches of the United States of America's Feral Gangster Government.

liverdiefree's picture

Perhaps you don't realize that "no state" applies just to the states and not to the fedgov.

TheEndIsNear's picture

The Constitution does not authorize the federal government to emit ANY sort of currency/money. Creating gold and silver coins were supposed to be only within the province of the states, but of course the US Constitution has been routinely ignored by the federal government since long before 1913.

Hang 'em high!

ratpack1968's picture

Sure it does....Article 1, Section 8.  Things started getting fucked up with Federal Reserve Act of 1913 and made worse on August 16, 1971.  We've enjoyed an artificially high standard of living as a result, but will undoubtedly pay a steep price when it hits the fan. Oh, and IT WILL hit the fan eventually.

338's picture

Article 1 Section 9


No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or enumeration herein before directed to be taken.


Once they killed this it was over, we all became slaves to the state.


it was brilliant.



Dead Indiana Sky's picture

That picture of the Capitol Building took me back to the days of playing Fallout 3.

BigJim's picture

Ah, so the debtmageddon is now 25 years away?

Good to know.

Consuelo's picture



No worries, he simply decided to get rid of the imminent collapse ceiling, like um...

See how easy it is...?

2banana's picture

The Federal Debt Ceiling was and is a joke.

It never stopped reckless spending.

The republicans tried to hold the line once with it to force Clinton into some spending cuts.

They were so viciously attacked by the fake legacy media that they never tried it again.

They were literally accused of starving kids and throwing grandma into the street 

It is a big nothing burger now.

hxc's picture

They DID try it again with Obamao and IT WORKED!!!

They cut the deficit by ~800 bil the first year and similar but lower numbers after. The debt ceiling at least gives a reason for Congress to even discuss the national debt.

2banana's picture


Obama added more to the deficit than ALL other administrations combined and accounting for inflation.

Omen IV's picture

Exactly - end welfare for black and brown and save $1 Trillion / end the war machine and save $1.2 Trillion between the Security Agencies and DoD / end education mandates and save $1 Trillion - education is a waste of time for those below 100 IQ

The budget can easily be balanced by changing priorities.

Traditional Republicans will be all gone by 2020

And then It will be a new order

BigJim's picture

Ah, so Debtmageddon is now 25 years away?

Good to know.

Conax's picture

Doing away with the perfunctory debt ceiling debates removes the last, feeble coaster brake from America's bicycle. 

We're heading down a six mile grade straight to DeadMan's Curve, boys!

Or maybe it's a 20 mile grade, not quite sure. 


Hkan's picture

Not included death by drugs, fastfood, no medicals....riots...war....suicide...and so on.

1% keeps stock market going...getting richer...

FED...what a wonderful world.....

U.S. business as

alangreedspank's picture

I knew Lyndon Johnson was promiscuous, but I didn't think it was such that the nickname "Great Texas Porker" was warranted....

exonomic halfbreed's picture

Since both he and Goldwater were partially jewish and bound to help their friends in the middle east,  it is inappropriate (definitely not Kosher) to call him a porker.  OT, By the way doesn't that say an awfull lot about our choices in 1964, since JFK wanted to prevent a nuclear Israel?  I suppose that Sotero (Obama) might be just a manipulated offspring of Frank Marshal Davis and a tainted jewish princess, but LBJ in my humble opinion is pure evil.  Who interferred with the rescue of the USS Liberty?  If the Liberty had been destroyed, the blame would be on Egypt (a soviet client state at the time) and a nuclear weapon most likely was about to be dropped on Egypt. 

tedstr's picture

You'll know the end is near when they start burning the furniture and selling assets.  condos in Yellowstone.  legal taxed porn  soon very soon

NEOSERF's picture

Japan shows us we have another 200% of GDP to print, burn, hand out or whatever before the plunge happens.  The Glue Factory cliche is appropriate here.

seataka's picture

"My fellow Americans, I am pleased to announce that

 there has been a decrease in the increase in inflation" 

 Nixon on live TV decades ago


gregga777's picture

Lyndon B. Johnson and Richard M. Nixon should be dug up and hung for their disastrous leadership of America. Johnson for Vietnam and Nixon for China.

2banana's picture

You do realize that Nixon got us out of Vietnam?

gregga777's picture

The debt ceiling should be permanently abolished [afterwards when the Constitutional Republic is restored it will retroactively become a capital crime for the political parasites to be so profligate.] so that we can collapse the Anglo-Zionist Empire of Lies as quickly as possible. David Stockman apparently wants to preserve the Anglo-Zionist Empire of Lies. It's imperative to collapse the Anglo-Zionist Empire of Lies in order to restore the Constitutional Republic of the United States of America.

grasha87's picture

I have created a free market currency to help alleviate recessions that the Federal Reserve System has caused:

TuPhat's picture

The Wallark will not work.  I worked at a power plant.  If I am allowed to take x amount of watts home with me that's ok for power but how would I pay medical bills?  Not everyone works at a retailer like Walmart.  If I worked at Caterpillar I suppose I would take home a piece of a tractor track each day.  Not worth much to me or anyone.

StreetObserver's picture

What's bigger, ego or the national debt?