Over the weekend, the Washington Post let it slip that all is not well in Bidenomicsville. The deficit, it reports, could end up hitting $2 trillion when the current fiscal year ends in three weeks, which it describes as an “unexpected deficit surge.”
In other words, the deficit will nearly double this year, calling the lie on one of President Joe Biden’s favorite boasts about how he cut the deficit more than any president in history.
But while this apparently comes as a shock to the Post, as well as other liberal news sites that picked up on the Post report, anyone paying attention knew this was happening.
Back in February, for example, we pointed out that Biden’s reckless economic policies had added more than $5 trillion to projected deficits, even as he claimed he’d done more to cut the deficit than “any president in history.”
In early June, we noted that revenues had been plunging this year, despite all the boasts about a strong economy, and that “the projected deficit for the entire year is now close to $1.6 trillion, which is almost $300 billion higher than Treasury projected at the start of this fiscal year.”
In July, we pointed out that Bidenflation was pushing up the cost of federal entitlement programs such as Social Security and Medicare, and had resulted in a 37% increase in interest payments on the national debt in the first nine months of this fiscal year. That was the result of the Federal Reserve’s interest rate hikes, which were also a result of Bidenflation.
By August, Treasury had upped its projected deficit for this fiscal year to $1.9 trillion. (Treasury will release its updated projection for the year later this month. Don’t be surprised if the new projection for the 2023 deficit is higher still.)
The Post quotes Jason Furman, who was President Barack Obama’s top economic adviser, saying “To see this in an economy with low unemployment is truly stunning. There’s never been anything like it. A good and strong economy, with no new emergency spending — and yet a deficit like this. The fact that it is so big in one year makes you think it must be some weird freakish thing going on.”
Furman is right. And the “weird freakish thing” goes by a name: Bidenomics.
Despite multiple warnings from economists that his $2 trillion rescue plan, coming at a time when the economy had already roared back from the COVID lockdowns, would spark inflation, Biden signed it into law only months after taking office.
Since then, he has piled more and more spending on top, at times with bipartisan support, all paid for with borrowed money. And sure enough, inflation spiked.
Now, households are paying dearly in the form of sharply higher prices for food, energy consumer goods, rents, and just about anything else they buy.
At the same time, Biden pushed through tax hikes and unleashed federal regulators, who are now gleefully writing rules to ban gas stoves, force electric car sales, slap massive new costs on energy producers, with plenty more to come. These are all anti-growth policies that are having their expected effect.
This is what Bidenomics is all about. And now we have a budget crisis that is snowballing.
That’s because while revenues keep coming in “unexpectedly” low (thanks to Biden’s sluggish economy), interest rate hikes are fueling massive increases in the cost of financing the federal government’s $30 trillion debt load.
Just how much this cost has exploded can be seen in the chart below, which compares projected interest costs just before Biden took office with the most current forecast from the Congressional Budget Office.
The pre-Biden forecast assumed that policies in effect when he took office remained in effect. In other words, it included the Trump tax cuts, the impact of the massive COVID stimulus he approved, and his other economic policies.
As you can see, the CBO expected these costs to increase over the next decade.
But look at what has happened after Biden took office. In its January 2021 report, the CBO projected that interest payments this year would be $278 billion. The actual number will be more than twice that.
Over the course of the next decade, Bidenomics will add more than $4 trillion to the cost of paying interest on the national debt.
In other words, Congress would have to cut spending by $400 billion every year, just to offset the increase in interest payments thanks to Biden’s reckless fiscal policies.
This, folks, is a crisis. It’s one that has been building for quite some time. It’s one that the press was all too happy to ignore. That is until the Washington Post let the cat out of the bag.
So, kudos to the Washington Post for finally reporting on this. Just don’t expect anyone there or in the rest of the corporate media to blame Biden for this epic disaster.
— Written by the I&I Editorial Board