Last week I pointed out that President Biden is being fiscally irresponsible by downplaying our massive national debt, high rate of inflation and rapidly increasing interest payments on the debt (because of rising interest rates). All of this, and more, has now been carefully documented by the Congressional Budget Office.
- The pandemic is over but federal spending in 2022 still rose to 24.8% of GDP from an average of 21% of GDP from 1973-2022. It is predicted by the CBO to continue to be 24.9% of GDP, ten years from now in 2033.
- Although revenues were up to 19.6% of GDP last year, this still amounts to a deficit of 5.2% of GDP. Again, the CBO predicts an even higher deficit of 6.9% of GDP in 2033.
- The inflation rate fell from 6.5% in December 2022 to 6.4% in January 2023, in other words, just barely. This means that the Federal Reserve will have to keep raising interest rates aggressively for much longer to get inflation back down to the desired level of 2%.
- The higher the rate of inflation and the higher that interest rates must go to bring it down, the more likely the chance of a hard “recessionary” landing.
- The Treasury has to roll over 30% of our $31 trillion of debt, more than $9 trillion, in the next 12 months at interest rates now approaching 5%. This, of course, makes the debt that much worse.
- Amid the fiscal mess now being made worse by the Biden Administration, the Republican House wants the federal government to adopt a plan to reduce federal spending! What could make more sense?
- “The bottom line is that the President and the Democrats have built a much larger federal government that is taking nearly a quarter of all national income, up from about a fifth over the last fifty years.”
Conclusion. In our dangerous fiscal climate of massive debt, high inflation, and rising interest rates, the Biden Administration has dramatically increased federal spending. This is highly irresponsible and speeds up the inevitable day of fiscal reckoning which can’t be postponed forever. It should be opposed as strenuously as possible.
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