Debt is 100% of GDP, the highest level since World War II

The presidential campaign is once again turning politicians into cajoling game show hosts, promising voters huge tax cuts and spending increases with little regard for the debt crisis that will accelerate these policies.

Budget deficits are expected to exceed $2 trillion this year – despite relative peace and prosperity – and then rise to $4 trillion within a decade under current policies.

For the first time since the end of World War II, federal debt will exceed 100% of gross domestic product.

The upcoming conclusion of the Biden-Harris administration provides an opportunity to assess its role in these rising deficits.

Joe Biden and Kamala Harris certainly inherited an economic and fiscal mess. President Donald Trump had already signed legislation and executive orders that added $4 trillion to the 10-year deficit before the bipartisan response to the pandemic added another $4 trillion.

PEastern pandemic toll

However, when Biden-Harris took office, the pandemic-ravaged economy finally restarted and Americans returned to work. The Congressional Budget Office (CBO) predicted that budget deficits, which had temporarily risen to $3 trillion, would fall back to the pre-pandemic level of $1 trillion as pandemic aid expired.

Instead, the administration immediately disregarded the advice of even liberal economists and pushed through President Biden’s $1.9 trillion American Rescue Plan.

Since CBO had calculated that the recovering economy was only $420 billion below its operating capacity, this $1.9 trillion bazooka has far exceeded its economic stimulus purpose.

Consequently, just as economists warned, the excessive stimulus caused the economy to overheat and added three more percentage points to an inflation rate that was already rising due to past pandemic stimulus and supply constraints.

In total, this inflation cost typical families more than $10,000.

Furthermore, the individual expenditures of the American Rescue Plan were largely unnecessary. On that pent-up Democratic wish list was $350 billion to bail out federal budget deficits that didn’t actually exist, a bloated union pension bailout, and additional federal funding for schools for a decade – all sold to the public with additional unemployment benefits and tax rebates and tax credits for children.

Owed $28.2 trillion

The Biden-Harris administration’s spending spree didn’t end there. It also signed $1.4 trillion in new spending in the form of omnibus appropriations bills, $620 billion in student loan bailouts, $520 billion in new veterans benefits, a $440 billion infrastructure bill, a semiconductor law and $360 billion in new SNAP and health care spending pushed through executive order.

The offsetting savings promised in the Inflation Reduction Act and the Fiscal Responsibility Act are unlikely to materialize.

When you add it all up and include the resulting interest costs, the total is more than $5 trillion in new 10-year costs enacted under President Biden.

And that inflated number would have been even higher if the Supreme Court hadn’t blocked an even larger student loan bailout and if a Democratic Congress hadn’t reached its breaking point and blocked the original “Build Back Better” proposal, the 2.3 Cost trillions of dollars.

Almost all of that spending occurred in the first two years of the Biden-Harris administration, before inflation-weary voters staged their own intervention and elected a Republican House of Representatives in late 2022.

So instead of bringing budget deficits back to $1 trillion at the end of the pandemic, as the CBO predicted, Biden-Harris spending has brought the deficit back to $2.8 trillion in 2021 and to about $2.8 trillion this year $2 trillion increased.

The results are shocking:

• The CBO’s projected deficit for the full 2021-2031 period has increased from $14.5 trillion to $21.3 trillion – reflecting an additional deficit of $6.8 trillion.
• Federal spending (24% of GDP) and the budget deficit (7.5% of GDP) last year were the highest in American history outside of wars and recessions.
• U.S. debt is expected to reach $28.2 trillion this year, 100% of GDP – the highest level since the end of World War II.
• Since 2021, annual interest costs have nearly tripled, from $352 billion to nearly $1 trillion.
• Debt held by the public currently stands at $212,600 per household.

WHite House gas lighting

Instead of taking responsibility for this sea of ​​red ink, the White House incited voters by claiming it had reduced budget deficits.

Biden boasts that his $2 trillion budget deficits are $1 trillion below the pandemic peak of $3 trillion in 2020.

Of course, this 2020 figure was a one-time pandemic anomaly, preceded by $1 trillion in deficits that were expected to return as the economy reopens and pandemic aid expires.

Essentially, the president is treating the previously planned phase-out of temporary pandemic spending as his own historic spending cuts — and then spending the savings. This gaslighting was rebuked by Washington Post fact-checkers with a rare “Bottomless Pinocchio” rating.

Biden’s successor will inherit $2 trillion in deficits, rising interest costs and Social Security and Medicare trust funds that are on the verge of bankruptcy. A dismal fiscal balance indeed, bringing Washington closer to a debt crisis.

Brian Riedl is a senior fellow at the Manhattan Institute. Follow him on X @Brian_Riedl.