$5 Trillion Deficit in 2025?

 This is hypothetical but there is a decent chance (40% ?) that this could happen.

Read this: https://www.zerohedge.com/news/2023-10-23/unprecedented-fiscal-doom-loop-getting-worse

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. 

(Note: The GDP is now $26.8 trillion, so 20% of that is $5.36 trillion.)  So the reason I say 2025 instead of 2024 is that it will take a while (6-9 months) to realize that we are in a recession and for the government to take action.  The recession may start in January 2024. The stimulus will mostly occur in 2025.  2023 revenues were $4.4 trillion and expenditures were $6.1 trillion.  If revenues drop another 20% to $3.5 trillion, and there is a stimulus of $3 trillion (extended unemployment, tax credits, bailouts etc), then there is $9 trillion in spending vs $3.5 trillion in revenue and a $5.5 trillion deficit.  This is not too far-fetched.

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Ok, even if there is no recession in 2024, there is another problem in 2025 or 2026, which is expiring tax cuts (which will probably be extended) and expiring expenditures (which will probably be reinstated).

Read: https://www.nationalreview.com/magazine/2023/10/16/the-mother-of-all-fiscal-cliffs/

The mother of all fiscal cliffs is coming in 2025, and we’re not ready for it. About $5 trillion in new debt that’s expected to hit in 2025. That’s five times the level of the 2009 stimulus bill responding to the worst economic crisis since the Great Depression, and it’s expected to come in a time of no wars, low unemployment, and a growing economy. A new administration will begin in January 2025, and the first year is usually a time to reward the people who helped get you elected, not to cut the deficit. Simply extending all these provisions would add about $5 trillion to the debt over the ten-year budget window, with about $3 trillion of that coming from extending the tax cuts. But it’s even worse than that. The discretionary-spending caps from the debt-limit deal also expire in 2025, and the debt limit will need to be raised again.

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Update (11/1) See this quote from Lawrence Leperd:

Larry says about our worsening financial picture in the U.S.:

“By the way, you know, we're gonna have to start thinking about what comes after, you know, a trillion. I mean, I think it's a quadrillion. And, uh, because, you know, at the stage, at the rate that we're going, it is becoming exponential. And that's, of course, why I believe that this monetary system is doomed. It's just— there's— it's absolutely doomed. I'm— I hate to say that, and I'm not trying to be a doomsayer or fearmonger. I just think it's basic math.”

“There appears to be zero fiscal restraint in Washington D.C. They are behaving as if there’s no consequences but the 10 year is saying ‘oh, there will be consequences, alright,’” he adds.

https://quoththeraven.substack.com/p/time-to-think-quadrillions-as-theres