Staff Reports
In a recent speech in Philadelphia, President Joe Biden took the opportunity to pat himself on the back for supposedly cutting the deficit by $1.7 trillion in his first two years in office. However, he failed to mention that this reduction was mainly due to a one-off influx of tax revenue and capital gains resulting from inflation. While Biden boasts about his deficit-cutting abilities, the Committee for a Responsible Federal Budget (CRFB) warns that the federal budget deficit is on track to double to $2 trillion this year.
As President Biden touted his apparent deficit-cutting mettle, a nonpartisan fiscal policy research group warned of an "unprecedented" explosion in the federal budget deficit, which it said is on track to double to $2 trillion this year. https://t.co/dOfQseXO5n
— The Epoch Times (@EpochTimes) September 5, 2023
According to the CRFB, this increase in the deficit is unprecedented given the state of the economy. Normally, deficits do not rise so sharply when the economy is doing relatively well. The CRFB attributes this rise to factors such as soaring interest rates, higher Social Security and Medicare costs, a lack of Federal Reserve remittances to the U.S. Treasury, and a “big” budget deal. In fact, the CRFB states that deficits are set to double this year, excluding student debt cancellation.
The Congressional Budget Office (CBO) projected earlier this year that the budget deficit for 2023 would rise to around $1.4 trillion. However, the CRFB’s latest estimate shows that the deficit is rising even faster than anticipated and will reach $2 trillion this year. This increase in deficit spending under Biden’s watch is cause for concern, as it could lead to a potential deficit “doom loop” if interest rates continue to rise rapidly. Former Treasury Secretary Larry Summers warns that if deficits get out of control and interest rates rise significantly, it could lead to a fiscal crisis.
Overall, the national debt has increased by approximately $5 trillion since Biden took office, reaching around $32.8 trillion. As the government’s expenses continue to grow and income falls, interest payments on public debt have also increased. Net interest on public debt is 34 percent higher in fiscal year 2023 compared to the previous year. This is due to higher interest rates on government debt as the Federal Reserve has aggressively raised rates to combat inflation.
In light of these concerning developments, Republicans are pushing for spending cuts to address the rising deficit. They have already won some spending concessions during recent talks on lifting the debt ceiling, and with the prospect of a government shutdown looming, they are once again advocating for fiscal restraint. As the deficit continues to skyrocket under Biden’s watch, it remains to be seen how the administration will address this economic challenge.
