US Road to Fiscal Ruin
President Biden claims his economic plan is “fiscally responsible,” but a new report from the nonpartisan Congressional Budget Office proves the opposite — and shows why Republicans are entirely right to use debt-ceiling talks to rein in spending.
CBO’s latest review, which factors in recent laws, executive actions, economic trends and other developments, shows the nation on a glidepath toward a major fiscal crisis, if not outright bankruptcy.
Publicly held debt, already $24 trillion, is set to nearly double, to $46 trillion, by 2033.
That’s a record 118% of the nation’s entire annual economic output, warns the Committee for a Responsible Federal Budget. And it’ll hit 130% if programs officially set to expire instead get extended, as Democrats will push to do.
Yearly deficits, recently deemed alarming if they approached $500 billion, are now running at $1.4 trillion — and will more than double again, to $2.9 trillion, within 10 years.
And while Biden’s goading Republicans to swear off any fixes to Social Security and Medicare (even ones he used to favor), the CBO warns that both programs will be insolvent within a decade, triggering automatic cuts that will sock seniors hard. How dare anyone suggest Congress discuss ways to stave off such a disaster?
The obvious cause of all this red ink: runaway spending. Tax revenue as a share of GDP will run significantly above the 17.3% 50-year average, yet spending will far outpace it — climbing from 23.5% of GDP next year to 25.3% in 2033. (The 50-year average for spending is 20.9%).
In all, Uncle Sam will shell out $80 trillion over the next decade, about a third more than the $60 trillion he rakes in. And for all the left’s complaints of how debt grew under President Donald Trump, Democratic legislation and acts by Biden over just the past year — including $1.1 trillion in discretionary spending hikes, $770 billion for expanded veteran health care and $641 billion in student-debt forgiveness — will add a whopping $3.3 trillion in IOUs by 2032.
Interest costs alone will soon prove overwhelming. And unless spending slows, Americans will be forced to cough up more in taxes — or see Washington go broke.
Which is why Republicans don’t want to raise the debt ceiling without curbs to outlays. And why Biden’s refusal even to discuss cuts couldn’t be more reckless.
Yes, Democrats will argue that taxing the rich can fix everything. It can’t: As the Manhattan Institute’s Brian Riedl has noted, taking every dollar earned over $1 million couldn’t generate more than $9 trillion over a decade.
And that assumes high earners won’t change their behavior despite the 100% tax rate. In reality, the lesser-but-still-extreme tax hikes pushed by the AOC crowd are guaranteed to send them fleeing the country, just as current rates have top taxpayers and businesses leaving the likes of New York and California for Florida and Texas.
Why have a debt ceiling at all, if it’s only to be raised without “conditions,” as Biden demands? Indeed, the whole point of a “ceiling” is to force a discussion, and it’s led to significant brake-slamming in the past. Biden himself used to insist on negotiations.
The grim CBO numbers show that Washington must trim outlays to stabilize the nation’s finances. Democrats will scream about the “pain” imposed by any cuts, but the pain will be far worse if Uncle Sam goes bust.