Issues & Insights
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The Nation’s Fiscal Crisis Just Got Real

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.

Source: The Congressional Budget Office I&I Chart

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

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I & I Editorial Board

The Issues and Insights Editorial Board has decades of experience in journalism, commentary and public policy.

4 comments

  • “kudos to the Washington Post for finally reporting on this.”

    Well, they reported on it, but the timing was calculated, the paper’s headline and subheadline were awful, and the author’s excuse-making in the content was pathetic:

    – The article went up at 6 a.m. on the Sunday of a holiday weekend to achieve the lowest conceivable visibility. The writer had the info he needed well before that, and the post should have gone up on a weekday morning.

    – My immediate reaction to the headline and sub-headline was, “Who do you think you’re kidding?” Specifically: “U.S. deficit explodes even as economy grows; A strong economy usually reduces the deficit. Not this time.”

    Uh, this economy is NOT strong. It contracted during the first half of 2022. The economy as measured by S&P’s monthly GDP measurements only grew by 2.9 percent during the next four quarters. Real wages have declined significantly. Interest rates (as I&I noted) wreaking havoc on everyone’s finances, including Uncle Sam.

    – Contentions made in the content are simply awful, Just a few —
    — The deficit surge” is supposedly “unexpected” and “has confounded many economists’ expectations.” My goodness, it could not have been more expected, given the admin’s chronic over-stimulus, over-spending, and over-regulation.
    — “The higher deficit may undermine Biden’s attempts to take credit for reining in the budget ahead of the 2024 presidential election.” MAY?? Given that nothing has been “reined in” at all, there’s nothing to “take credit” for.
    — There are several obviously false descriptions of the recent economy: we’ve supposedly had “unusually strong economic growth” (horse manure); Jason Furman’s unchallenged “a good and strong economy” statement; and the big show-stopper, the author worrying that “the perception of higher deficits” is policymaking problem. The higher deficits are a REALITY, not a perception, sir.
    — The deliberate understatement of the year: “The Treasury Department is also on track to take in substantially less in new revenue this year …” There’s a reason the writer didn’t quantify it. Year-over-year federal receipts in the first 10 months of the current fiscal year were down by 10%. Factor in inflation, and that’s a real decline of about 16%. This is recession-level deterioration.

    Excuse me for not giving the Post “kudos” for this awful report. The best that can be said is that it recognized the deficit’s existence. Beyond that, it’s dreck.

  • You note above, so scholarly, notes that President Biden may not be telling the truth about the budget, deficit, costs, etc. Or about anything.

    I suggest that I & I keep a running article the other way instead, noting when Biden does tell the truth, something he has been incapable of all those years in the Senate, too.

    Do his schoolmates before college recall Biden ever telling the truth in school?
    I recall one or two such odd duck schoolmates who never told the truth.
    Each of them had a few screws loose, too.

    Please, like Ramirez’s brilliant daily cartoons, run a headline note whenever Biden tells the truth.

  • The decrease in Treasury receipts is the most interesting development here. It suggests someone has been telling lies at the Bureau of Labor Stats about employment. The continual adjustment downwards of employment numbers in the months following the inital report, the accumulation of which is around 300,000 for the year, suggests manipulation.

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