This week in Bidenomics: Debt bomb

This week in Bidenomics: Debt bomb
Rick Newman·Senior Columnist | YAHOO Finance
Fri, May 27, 2022, 1:45 PM

President Biden is proud of the declining budget deficit under his watch. But lucky timing will turn against him if he runs for a second term in 2024.

The Congressional Budget Office updated its 10-year budget outlook on May 25, and the short-term news is encouraging. The federal budget deficit will drop from $2.8 trillion in 2021 to around $1 trillion this year, and to a bit less in 2023. That’s a better forecast than CBO’s 2021 outlook. The improvement reflects a sharp increase in government tax revenue resulting from a strong recovery from the COVID recession of 2020. Government spending is also down sharply this year as the final batch of COVIID stimulus, passed last year, runs out.

The longer-term outlook is pretty horrible, however. All the structural problems with the U.S. fiscal situation remain. Spending on Medicare, Social Security and other “entitlement” programs will continue to rise as a percentage of federal outlays, as the population ages and health care costs continue to rise. That will leave a shrinking portion of money for “discretionary” spending on infrastructure, transportation, aid programs and many other things, including defense, even with the infrastructure law Congress passed last year.

The most ominous change is ballooning federal outlays on interest payments, given that inflation is much higher than it was last year and interest rates are rising as a result. Net interest payments in 2021 were $352 billion, or a manageable 5.2% of all outlays. By 2032, CBO expects net interest payments to triple to $1.2 trillion, which would be 13.4% of all outlays. That’s money the Treasury will be paying to bondholders just for the right to borrow. It won’t finance anything for taxpayers and will leave even less money for other programs.

Debt analysts have warned for years that the U.S. budget imbalance is unsustainable, but many predictions of disaster haven’t happened (yet). In theory, a debt crisis could occur if investors buying Treasury securities, which finance the government’s debt, start to think the United States is in over its head, and demand higher interest rates for what they perceive as a growing risk of buying Treasuries. That could trigger a debt spiral in which borrowing costs rise further, leaving Washington short of money for critical functions.

There are solutions. If the government had to, it could either slash spending or raise taxes to narrow a debt gap that got too large. But that would probably cause a recession, and perhaps a bad one. Congress typically provides trillions of dollars in deficit-financed aid during recessions, but if it’s a recession triggered by a debt crisis, Congress might not be able to do that.

But don’t worry! Nothing like this has happened yet because the global demand for Treasuries seems to be bottomless, and investors don’t seem to have any worries at all about Washington repaying its debts. The United States has one huge thing going for it, which is that the dollar is the world’s favorite currency, which makes dollar-denominated U.S. debt supreme to most other forms.

A time bomb

But if the CBO forecasts are in the ballpark, the magnitude of those interest payments is going to become a big political problem, at a minimum. The mushrooming national debt, now $30.4 trillion, is the ultimate boiling frog, an incrementally worsening time bomb that nobody wants to deal with today but everybody will have to deal with if or when it blows. Nobody knows when the pressure to do something will become irresistible, but it’s hard to imagine deficits and the overall debt can grow indefinitely, as a portion of the economy, without requiring fiscal or political intervention.

In CBO’s forecast, net interest payments will equal the amount spent on defense in 2029, and they will be 20% more than the defense budget by 2032. Net interest payments would be 51% more than Medicaid spending in 2032, and roughly equal to all non-defense discretionary spending. This seems, I don’t know … crazy? Could we really spend more on interest payments than we do on the Pentagon every year?

Director of the Office of Management and Budget Shalanda Young listens to U.S. Senator Bernie Sanders (I-VT) speak during a U.S. Senate Budget Committee hearing about U.S. President Joe Biden's budget plan for fiscal year 2023, on Capitol Hill in Washington, U.S., March 30, 2022. REUTERS/Elizabeth Frantz
Director of the Office of Management and Budget Shalanda Young listens to U.S. Senator Bernie Sanders (I-VT) speak during a U.S. Senate Budget Committee hearing about U.S. President Joe Biden's budget plan for fiscal year 2023, on Capitol Hill in Washington, U.S., March 30, 2022. REUTERS/Elizabeth Frantz
Biden has personally taken credit for the big drop in spending this year, and the stark improvement in the annual deficit, calling it “the biggest decline in a single year in American history.” His budget director, Shalanda Young, hailed the May 25 CBO report as evidence of a “strong economic recovery, powered by President Biden’s economic and vaccination policies.” Meh. Budget experts say the improving deficit is almost entirely due to the end of fiscal stimulus passed in 2020 and 2021, some under Trump and the rest under Biden.

The deficit matters, even now, because Democratic Sen. Joe Manchin of West Virginia is insisting on some form of deficit reduction if there’s ever going to be a revival of Biden’s “build back better” legislation, which died late last year when Manchin said he couldn’t vote for it. Democrats have promised a streamlined version, but that was supposedly due by Memorial Day, and BBB lite is nowhere to be seen. Yet Manchin still says a climate, energy and deficit-reduction bill could pass this year, with every Democratic vote in the Senate. Biden, dogged by inflation and a gloomy national mood, could certainly use the win, even if it’s a shadow of the bill Biden wanted originally.

Biden might get another year or so to crow about falling deficits. But the mid 2020s are shaping up as crunch time for the spending-revenue mismatch. Medicare is likely to start running short of money in the next few years, requiring more funding, benefit cuts or a combination of both. And the higher interest rates go, the sooner federal interest payments will gobble up taxpayer funding. No president wants to have to deal with the budget mismatch, but the next president may be the one who has no other choice.

Quote :

So- he's going to do all the good he can and then pass it on..

   YGBSM! ..All the good? .. You've gotta be completely brain dead
....All the good like this..where he abandoned all these people in Afghanistan to die    


People smushed in this plane like sardines ..others so desperate they're clinging to the side of the plane, falling outta the sky




  He caused the suffering and death of these people as well as Americans and our allies ... He left *Billion$* in military weapons and equipment for the taliban to kill more people .. Left them the fucking country to rule .. Is that the good he's gonna pass on?  

He reversed all the policies to secure the southern border and opened it for millions of unskilled, unproductive migrants from all over the world for American taxpayers to support .. Americans didn't agree to that      

He stuck his nose in the Ukraine-Russia conflict.. Giving them billion$  of American taxpayer's money and billions more in military weapons .. Doing his best to start a fucking war with Russia

Dems got trillions for their infrastructure bill for which they've done absolutely nothing ..Bootigeg gonna fix the gay roads
Printed more money devaluing the currency.. We have food shortages, inflation with prices of everything skyrocketing ..vital people losing their jobs over the mask-vaccine bullshit, paying people to stay home with stimulus and unemployment checks when many of them weren't working and collecting welfare anyway

It's gonna take generations to recover from "~all the good he's passing on~" .. If it's even possible .. Biden and the democrats are literally destroying the U.S. and all that our ancestors gifted to us ... And mindless sheeple like you, Temple, remain oblivious to it all .. You have nothing but self righteousness and hatred for your percieved political enemies

Grackle wrote:

    I guess i fuk'd up the bb code for that first video .. I'm not gonna edit to fix it ... I hafta write my own bb code with this phone .. Gets to be a pain in the ass      

Fixed.

Thanks Obi

Grackle wrote:

Thanks Obi

Temple wrote:

Trump’s most enduring legacy could be the historic rise in the national debt....

////

Check the projection.

"Path to Prosperity" - Charting Ryan's Debt Exaggeration - FactCheck.org

Temple wrote:

The national debt has risen by almost $7.8 trillion during Trump’s time in office.

That’s nearly twice as much as what Americans owe on student loans, car loans, credit cards and every other type of debt other than mortgages, combined, according to data from the Federal Reserve Bank of New York.
It amounts to about $23,500 in new federal debt for every person in the country.

The growth in the annual deficit under Trump ranks as the third-biggest increase, relative to the size of the economy, of any U.S. presidential administration

And the increase under Biden will be even larger.

Do you not understand the projection on the chart I posted??

The debt under Biden keeps rising by the second, Temple:

https://www.usdebtclock.org

And it gets even worse over the next four years, again due to Biden:

https://www.usdebtclock.org/current-rates.html

An ELEVEN TRILLION DOLLAR INCREASE!!!

The Wise And Powerful wrote:

Temple wrote:

The national debt has risen by almost $7.8 trillion during Trump’s time in office.

That’s nearly twice as much as what Americans owe on student loans, car loans, credit cards and every other type of debt other than mortgages, combined, according to data from the Federal Reserve Bank of New York.
It amounts to about $23,500 in new federal debt for every person in the country.

The growth in the annual deficit under Trump ranks as the third-biggest increase, relative to the size of the economy, of any U.S. presidential administration

And the increase under Biden will be even larger.
Do you not understand the projection on the chart I posted??

The charts are quite colorful and large, I did enjoy seeing them.
Nonetheless;
Trump’s most enduring legacy could be the historic rise in the national debt... And-
The growth in the annual deficit under Trump ranks as the third-biggest increase, relative to the size of the economy, of any U.S. presidential administration.
Trump is a record holder--
Time will tell if it's broken-- exciting, huh-

IT'S ALL WOODROW WILSON'S FAULT !!!!!

President Wilson added about $21 billion to the national debt, a 723% increase from the $2.9 billion debt at the end of Taft's last budget for fiscal year 1913.

https://www.thebalance.com/us-debt-by-president-by-dollar-and-percent-3306296


And then they had the gall to put him on the $100,000 bill too !

I AM SHAKING WITH ANGER !!1!!!1!