Janet Yellen is saying the X-date when the U.S. government runs out of money has been moved up to June 1st. Normally, I wouldn't listen to the Treasury, because it lacks so much credibility. But, checking around town, the CBO also believes that government cash could run out in June, rather than July or August -- so there's a little more credibility there.
Also, the Peterson Institute is talking June, and so is the Brookings Tax Policy Center. So, the so-called 'X-date' -- that's the 'run out of money' day -- could come in June. But, of course, this is very imprecise and no one really knows.
By the way, House Speaker Kevin McCarthy and the Republican conference, which has the only debt ceiling increase plan in Washington, coupled with budget reform, got their product out in April. It's just that Joe Biden won't deal with it. And there is no other debt ceiling increase plan in Washington D.C. No other plan.
Even Republican Senate leader Mitch McConnell is telling Biden to start negotiating with Speaker McCarthy.
One reason the government's running out of cash faster than people thought is because of the slumping economy. In fact, the Biden economy in the last five quarters has produced 0.9% growth. In other words, less than 1% over five quarters, or 15 months, with a 6.4% inflation rate. That is a prolonged slump with harmful inflation.
That is why Biden's polls are so bad. That's why Wall Street Journal columnist Gerard Baker is writing that Trump could win, if people vote their pocketbooks. And, indeed, Trump is talking about the economy at every whistle-stop.
Meanwhile, GDP doesn't really matter to typical working families. But what matters is the soaring price of groceries and gas and the fact that inflation is running faster than their wages. That's the key pocketbook issue.
Because of this prolonged economic slump, year-to-date tax revenues are running $74 billion below last year, with individual tax receipts $95 billion below last year. Meanwhile, federal spending -- get this -- is running $359 billion above last year. That's $359 billion! That is why the budget deficit for the first half of the year is running about $433 billion above a year ago.
The budget deficit a year ago for fiscal FY '22 was $1.4 trillion. That's the deficit. At this rate, we could be running for FY '23 a deficit of somewhere between $1.7 trillion and $2 trillion. These numbers were compiled by Joe Lavorgna, formerly chief economist of the White House National Economic Council. Mr. Biden says he's cutting the deficit, but he's getting a lifetime 10 "Pinocchios" for that untruth.
I know all these numbers are boring, but I hope they paint a picture and tell a story that an inflation-prone, stagnant economy bankrupts the country. That's where the damaging debt comes from. Say it again: inflation-prone, stagnant economy and continued overspending. Now, to get even more boring – I’ve got tell you how exciting this is for me personally -- there's only so much the Treasury can borrow from the civil service retirement, the postal service retirement, the federal financing bank, the exchange stabilization fund, and the thrift savings plan. Actually, borrowing from these retirement plans is itself a pretty terrible idea, but that's what happens when you have a malfunctioning economy with continued overspending and high inflation.
This story will only get worse if Joe Biden continues to avoid talking turkey with Speaker Kevin McCarthy, who has the best plan in town to save America's finances. In fact, again, he has the only plan in town. Quit stalling, President Biden, and get down to work. Save America. Pass McCarthy's LImit, Save, Grow Act. And quit bankrupting America.
This article is adapted from Larry Kudlow’s opening commentary on the May 2, 2023, edition of "Kudlow."