by Peter Schiff, Schiff Gold:

The US is heading for economic lockdown as the impact of the coronavirus grows. To cope with the crisis, President Trump has promised fiscal stimulus. The actual plan remains unclear, but the Trump administration has floated a reduction in payroll taxes, along with bailouts and loan guarantees for struggling industries. While the details are murky, one thing is certain — it will cost billions of dollars.

Meanwhile, the US government is already living far above its means. Uncle Sam recorded another massive budget deficit of $235 billion last month, according to the latest Treasury Department report.

The February deficit was up about $1 billion year-on-year. That may not seem significant, but it follows on the heels of a $32.6 billion deficit in January. The US government ran a surplus in January 2018.

February’s shortfall brings the FY2020 budget deficit to $625 billion. That compares with $544 billion at this point in FY2019.

The deficit trajectory is clearly upward, even before adding billions in spending for coronavirus relief.

Spending continues to be the culprit. Government revenues were up 12% year-on-year, but spending also rose 5% compared to February 2019. So far in this fiscal year, the federal government has spent just a hair under $2 trillion.

The US government was on track for a $1 trillion deficit this fiscal year, even before coronavirus. These are the kind of budget deficits one would expect to see during a major economic downturn. The federal government has only run deficits over $1 trillion in four fiscal years, all during the Great Recession. We’re approaching that number today, despite having what Trump keeps calling “the greatest economy in the history of America.”

Now it looks like the US might be heading toward an actual economic downturn. If deficits are this bad now, what is it going to look like when coronavirus spending starts to come through the pipeline? As Peter Schiff said in a recent podcast, “They’re talking about loan guarantees for everybody. How is the government that’s the world’s biggest debtor going to guarantee anybody else’s debt?”

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