What Happens After A Debt Collector Contacts You
Within five days after a debt collector first contacts you, the collector must send you a written notice that tells you the name of the creditor, how much you owe, and what action to take if you believe you do not owe the money. If you owe the money or part of it, contact the creditor to arrange for payment. If you believe you do not owe the money, contact the creditor in writing and send a copy to the collection agency informing them with a letter not to contact you.
Tracking The Federal Deficit: July 2020
The Congressional Budget Office estimates that the federal government ran a deficit of $61 billion in July, the tenth month of fiscal year 2020. Although this Julys deficit was actually smaller than last Julys $120 billion deficit, the change does not represent an improved fiscal condition but a mere timing shift. The deadline for non-withheld individual and corporate income taxes, normally in April, was delayed until July of this year, causing an unusual spike in July revenue . Even this influx of taxes was overcome by monthly outlays that, at $624 billion, were 68% greater than last Julys. The cumulative budget deficit for FY2020 now stands at $2.8 trillion, more than triple the deficit at this point last year.
Analysis of notable trends: Stepping back from monthly fluctuations caused by the change in filing deadlines, total revenue so far this fiscal year is down 1% from this point last year. Revenues through this March had actually been 6% higher than through the same point last fiscal year, as higher individual and corporate earnings led to greater individual and corporate income tax receipts. Then the pandemic hit. From April through July, revenues are 10% lower than over same months last year, a combination of economic damage and legislation that gave individuals and corporations greater tax deductions.
Tracking The Federal Deficit: April 2021
The Congressional Budget Office estimates that the federal government ran a deficit of $225 billion in April, the seventh month of fiscal year 2021. Aprils deficit was the difference between $439 billion of revenue and $663 billion of spending. If not for a shift in the timing of some payments because May 1 fell on a weekend, Aprils deficit would have been $165 billion.
So far this fiscal year, the federal government has run a cumulative deficit of $1.9 trillion, the difference between $2.1 trillion of revenue and $4.0 trillion of spending. This deficit is 26% greater than at the same point last fiscal year and 252% greater than at this point in fiscal year 2019.
Analysis of notable trends: In normal years, spending and revenues typically follow similar monthly patternsan influx of individual income taxes arrives in April, corporate income taxes are paid quarterly, refundable tax credits are largely paid in February and March. These patterns allow analysts to gauge changes in federal finances by comparing each months spending and revenues to the same month in the prior year.
Recommended Reading: How To Claim Bankruptcy On Student Loans
Tracking The Federal Deficit: December 2018
The Congressional Budget Office reported that the federal government generated an $11 billion deficit in December, the third month of Fiscal Year 2019, for a total deficit of $317 billion so far this fiscal year. If not for timing shifts of certain payments, the deficit in December would have been roughly $32 billion, according to CBO. Decembers deficit is 52 percent lower than the deficit recorded a year earlier in December 2017. Total revenues so far in Fiscal Year 2019 increased by 0.1 percent , while spending increased by 9.4 percent , compared to the same period last year.
Analysis of Notable Trends in December 2018: Revenue from customs duties spiked by 83 percent from October-December 2018, relative to the same period in 2017, due to the administrations imposition of new tariffs. Conversely, corporate income tax revenue declined by 15 percent from October-December 2018 relative to the same period in 2017. This dip mainly reflects the reduction of corporate tax rates enacted in the Tax Cuts and Jobs Act of 2017. On the spending side, interest payments on the federal debt in December 2018 rose by 47 percent relative to December 2017.
Whos Responsible For The Current National Debt
In short? Pretty much every administration.
Regardless of political affiliation, parties in power have run up the deficit through higher spending and lower revenue collection, says Brian Rehling, head of Global Fixed Income Strategy at Wells Fargo Investment Institute.
While its easy to say a particular president or presidents administration caused the federal deficit and national debt to move a certain direction, its important to note that only Congress can authorize the type of legislation with the most impact on both figures.
Heres a look at how Congress acted during four notable presidential administrations and how their actions impacted both the deficit and national debt.
You May Like: How To File Your Own Bankruptcy In Illinois
Tracking The Federal Deficit: December 2021
The Congressional Budget Office estimates that the federal government ran a deficit of $20 billion in December 2021, the third month of fiscal year 2022. This deficit was the difference between $486 billion in revenues and $507 billion of spending. Decembers deficit was 85% smaller than that of December 2020. Additionally, both this year and last year, the timing of the New Years Day federal holiday shifted payments that would normally have occurred at the beginning of January into December. In the absence of these timing shifts, the federal government would have run a monthly surplus in December 2021 for the first time since January 2020, prior to the onset of the COVID-19 pandemic.
Analysis of notable trends: Through the first quarter of FY2022, the federal government has run a deficit of $377 billion, $196 billion less than at this point in FY2021. After factoring in the aforementioned timing shifts, the FY2022 deficit to date is $353 billion, or 33% smaller than FY2021the rest of this discussion accounts for these payment shifts. However, this deficit is $17 billion larger than the deficit accrued during the first quarter of FY2020, before the start of the pandemic.
Coronavirus And The National Debt
The U.S. government has taken efforts to offset the effects of worldwide health pandemic by borrowing money to invest in individuals, businesses, and state and local governments. Of these responses, the CARES Act has been the largest stimulus package in U.S. history. This stimulus package included $2.3 trillion towards relief for large corporations, small businesses, individuals, state and local governments, public health, and education. In order to pay for the relief fund, the government needed to expand its debt to do so, the government borrowed money from investors through the sales of U.S. government bonds.
Tracking The Federal Deficit: December 2020
The Congressional Budget Office estimates that the federal government ran a deficit of $143 billion in December, the third month of fiscal year 2021. This deficitthe difference between $346 billion of revenue and $489 billion of spendingwas made greater because January 3 fell on a Sunday, causing some payments normally made on that day to instead be made in December. If it were not for this timing shift, Decembers deficit would have been $96 billion, still $55 billion greater than that of December 2019. The deficit so far in fiscal year 2021 has climbed to $572 billion, which is $215 billion more than at this point last year. While revenues in these months were nearly unchanged from last year, outlays have grown by 16% .
Analysis of notable trends: December extended the pattern of fiscal year 2021, with little year-over-year change in revenue but a 17% rise in spending. Of all outlays, unemployment insurance benefitswhich totaled $3 billion last December but $28 billion this Decembercontributed the most to the spending increase. This has been a trend: Unemployment insurance benefits have caused almost 40% of greater cumulative spending from this point last year, soaring from $7 billion in the first three months of fiscal year 2020 to $80 billion so far this fiscal year. Decembers spending on Medicaid and Social Security benefits further added to the deficit.
Revenues rose 3% from last December, thanks to greater individual income and payroll tax receipts.
How Does Us Debt Compare To That Of Other Countries
The United States debt-to-GDP ratio is among the highest in the developed world. Among other major industrialized countries, the United States is behind only Japan.
The pandemic has sharply increased borrowing around the world, according to the International Monetary Fund. Among advanced economies, debt as a percentage of GDP has increased from around 75 percent to nearly 95 percent, driven by double-digit increases in the debt of the United States, Canada, France, Italy, Japan, Spain, and the United Kingdom .
The United States has long been the worlds largest economy, with no record of defaulting on its debt. Moreover, since the 1940s it has been the worlds reserve-currency country. As a result, the U.S. dollar is considered the most desirable currency in the world.
High demand for the dollar has helped the United States finance its debt, as many investors put a premium on holding low-risk, dollar-denominated assets such as U.S. Treasury bills, notes, and bonds. Steady demand from foreign creditorslargely central banks adding to their dollar reserves, rather than market investorsis one factor that has helped the United States to borrow money at relatively low interest rates. This puts the United States in a more secure position for a fiscal fight against COVID-19 compared to other countries.
Don’t Miss: How Many Times Can You File Bankruptcy
Income Security And Covid
Income security spending of $1.6 trillion was boosted by $569.5 billion in pandemic relief payments and $79 billion in child tax credit payments. It also included $397.9 billion for unemployment compensation, $168.1 billion on food and nutrition assistance, $89.8 billion in housing assistance, and $156.1 billion in federal employee retirement and disability costs.
Tracking The Federal Deficit: April 2022
The Congressional Budget Office estimates that the federal government ran a surplus of $308 billion in April 2022, the seventh month of fiscal year 2022. This surplus was the difference between $864 billion in receipts and $556 billion in spending. Aprils surplus compares to a $226 billion deficit in April 2021, with the dramatic change primarily due to the winding down of most pandemic relief spending and income tax receipts arriving in April 2022 that were delayed during the last fiscal year. In both 2021 and 2022, May 1 fell on a weekend, shifting some outlays into April that would normally have occurred in May. If not for those shifts, the April 2022 surplus would have been $373 billion and the April 2021 deficit would have been $166 billion. The following discussion excludes the effects of those timing shifts.
Analysis of notable trends: The federal government typically runs a surplus in April, the month when most taxpayers pay individual income taxes. However, due to high levels of pandemic relief spending and the IRSs decision to delay Tax Day in 2020 and 2021, April 2022 marked the first April surplus since 2019.
Don’t Miss: What Happens To Credit Report After Bankruptcy
Us Stops Taking Student Debt Forgiveness Applications After Trump Judge Ruling
-The United States government has stopped taking applications for student debt relief, after a federal judge blocked President Joe Bidens loan forgiveness plan, according to a notice on a government website.
A judge in Texas who was appointed by former President Donald Trump ruled on Thursday that Bidens plan to cancel hundreds of billions of dollars in student loan debt was unlawful and must be vacated. The Biden administration is appealing the ruling.
Courts have issued orders blocking our student debt relief program. As a result, at this time, we are not accepting applications. We are seeking to overturn those orders. If youve already applied, well hold your application, the notice says.
About 26 million Americans have applied for student loan forgiveness, and the U.S. Department of Education has already approved requests from 16 million.
The appeal would be heard initially by a three-judge panel of the New Orleans-based 5th U.S. Circuit Court of Appeals, a court dominated by conservative judges who have stymied other Biden policies.
Of the courts 16 active judges, only four were appointed by Democratic presidents. Trump appointed six of them.
White House Press Secretary Karine Jean-Pierre said Thursday the department would hold onto application information so it can quickly process their relief once we prevail in court.
How Much Does Rising Us Debt Matter
The massive borrowing due to the pandemic, along with Bidens big spending plans, has renewed debate over the peril posed by the national debt. Some economists fear that the United States will become stuck in a debt trap, with high debt tamping down growth, which itself leads to more debt. Others, including those who subscribe to the so-called modern monetary theory, say the country can afford to print more money.
Some say that servicing the debt could divert investment from vital areas, such as infrastructure, education, and the fight against climate change. There are also fears it could undermine U.S. global leadership by leaving fewer dollars for U.S. military, diplomatic, and humanitarian operations around the world. Other experts worry that large debts could become a drag on the economy or precipitate a fiscal crisis, arguing that there is a tipping point beyond which large accumulations of government debt begin to slow growth. Under this scenario, investors could lose confidence in Washingtons ability to right its fiscal ship and become unwilling to finance U.S. borrowing without much higher interest rates. This could result in even larger deficits and increased borrowing, or what is sometimes called a debt spiral. A fiscal crisis of this nature could necessitate sudden and economically painful spending cuts or tax increases.
You May Like: What Are The Alternatives To Filing Bankruptcy
What Makes The Debt Bigger
The leading federal spending categories currentlySocial Security, Medicare/Medicaid and defenseare the same as in the 1990’s, when national debt was much lower relative to GDP. The U.S. remains the world’s largest economy and one of the richest countries. How, then, did the debt situation deteriorate? Numerous factors are in play.
Who Decides How Much Interest The Us Pays On Its Debt
Supply and demand. In other words, the marketplace. When the government needs to raise debt financing, it sells debt securities in an auction. Bidders offer to buy the debt for a specific rate, yield, or discount margin, and all successful bidders receive the highest yield or discount the Treasury accepts. Government debt buyers may include central banks, though their goal is typically to foster sustainable economic growth rather than to finance deficit spending.
Recommended Reading: Will Bankruptcy Affect Me Renting An Apartment
Why Is The National Debt So High
When the federal government spends more than it takes in, we have to borrow money to cover that annual deficit. And each years deficit adds to our growing national debt.
Historically, our largest deficits were caused by increased spending around national emergencies like major wars or the Great Depression.
Tracking The Federal Deficit: May 2020
The Congressional Budget Office reported that the federal government ran a deficit of $399 billion in May, the eighth month of fiscal year 2020. This represents almost double the monthly deficit recorded in May 2019. So far this fiscal year, the budget deficit has mounted to $1.88 trillion, more than two-and-a-half times as large as at this point last year . Total revenues so far this fiscal year are down 11% compared to the same point last year, while outlays are up 29% .
Analysis of notable trends: CBO notes that the fiscal year so far can be split into two distinct parts: one before the new coronavirus had affected economic output and federal finances and one in which the pandemic had ravaged both . In the pre-coronavirus part of the year, outlays and revenues were each higher than at the same point last year. During the past two months, however, outlays soared while revenues evaporated .
Outlays have surged in response to the health emergency itself and the resulting economic fallout: for example, spending on unemployment insurance soared from $2 billion last May to $93 billion this May spending on refundable tax credits surged from $3 billion last May to $53 billion this May outlays from the Small Business Administration rose from $98 million last May to $35 billion this May and spending on the Public Health Social Services Emergency Fund climbed from $250 million last May to $27 billion this May.
You May Like: Can You Apply For Student Loans After Bankruptcy
Tracking The Federal Deficit: November 2019
The Congressional Budget Office reported that the federal government generated a $207 billion deficit in November, the second month of fiscal year 2020. Novembers deficit is 1% higher than the deficit recorded a year earlier in November 2018. Novembers deficit brings the total deficit so far this fiscal year to $342 billion, which is 12% higher than the same period last year . Total revenues so far in FY2020 increased by 3% , while spending increased by 6% , compared to the same period last year.
Analysis of Notable Trends in This Fiscal Year to Date: Through the first two months of FY2020, revenue from excise taxes fell by 40% , relative to the same period in 2018, due to a one-year moratorium of the tax on health insurance providers. Conversely, revenue from customs duties increased by 32% as a result of additional tariffs imposed by the current administration, primarily on imports from China. On the spending side, outlays for Social Security, Medicare, and Medicaid rose by 7% , and spending on education rose by 25% , largely the result of rising subsidy costs for federal student loans.