Donald Trump has a spending problem.
Even before the COVID-19 pandemic, the federal government was on pace to break the single-year contract spending record of $598 billion.
By the way, that spending record was set just last year.
According to the latest data, the federal government had obligated $438 billion in spending, with agencies expected to unload almost $200 billion more before the close of the 2020 fiscal year.
Keep in mind, this isn’t total spending. This just represents money paid by various government agencies to contractors. Total federal spending was already north of $500 billion in June.
According to Daniel Synder, director of government contracts analysis at Bloomberg Government, coronavirus stimulus could add another $10 to $20 billion to the government’s discretionary spending.
Snyder said much of the contract spending for the pandemic would go toward networking capacity, bandwidth and telework services—which would put the government’s total discretionary spending at $650 billion or more.
Again, this isn’t total spending. This is just discretionary spending by federal government agencies. And keep in mind that President Trump ultimately controls these budgets.
According to the Bloomberg Government report, the Pentagon drives the bulk of this spending.
“Discretionary spending at the Army, Navy and Air Force each jumped approximately 10% in fiscal 2019. Since 2015, annual defense spending on contracts increased $122 billion—totaling $404 billion in fiscal 2019—while civilian agencies spent some $193 billion on goods and services in fiscal 2019. Agencies that deal with health care, including the Veterans Affairs and Health and Human Services departments, saw the largest increases in discretionary spending among civilian agencies. Conversely, the departments of Energy, State and Homeland Security saw their discretionary spending obligations decrease.”
It’s important to reiterate that the Trump administration was on track to set a spending record before coronavirus.
It’s also important to note that the federal government doesn’t have any money. It is borrowing at a torrid rate. The June budget deficit was bigger than all but five annual budget deficits in U.S. history.
That raises the next question: who will pay for all of this.
The answer is you and your children. And generations to come. Either through taxation or inflation. Most likely, both.
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