Bidenomics has already hurt the U.S. economy more than we could possibly imagine. The economic policy of President Biden, which was supposed to alleviate the financial burdens of middle-and-low-income households, has instead exacerbated their economic and financial conditions. And as if this was not enough, the federal deficit is set to double. What does this mean for American consumers and taxpayers?
The U.S. federal deficit is expected to double in 2023. The Congressional Budget Office (CBO) projects a deficit of $1.5 trillion in 2023, up from $1.4 trillion in 2022. According to CBO, this increase in the federal deficit is based on a number of factors. First, the expiration of pandemic-related relief spending, such as expanded unemployment insurance and certain tax credits. Second, the rise of interest rates on the national debt, and third, an aging population and the rising cost of healthcare.
Total Federal Deficits & Net Interest Outlays
Source: Congressional Budget Office (CBO)
The CBO also projects that the federal deficit will continue to grow in the coming years, reaching $2.0 trillion by 2028. Some experts are concerned about the growing federal deficit, arguing that it could lead to higher interest rates, economic instability, and a decline in the value of the dollar. Others argue that the deficit is not a major concern, as long as the economy is growing and the government is able to make its debt payments.
But the reality is that the rise of the federal deficit is going to hurt even more the middle-class and low-income households. It is a real concern that should never be neglected. It is important to fathom that if the federal deficit increases, interest rates will remain high as well. Indeed, a large federal deficit can lead to higher interest rates, as the government competes with businesses and consumers for loans. This can make it more expensive for families to borrow money to buy a home, car, or other goods and services.
Increasing the federal deficit means creating more government programs. The U.S. government does not need more government programs. As a matter of fact, the federal government has more than 80 federal programs supporting the means-tested welfare system alone. The sustainability of each of these programs requires the federal government to increase its borrowing power and to raise taxes, which hurts the purchasing power and disposable income of the American consumer. Thus, in order to reduce the deficit, the government may have to cut spending on these mean-tested programs. This will help middle-class and low-income families retain more of their own money from their paychecks.
Moreover, an increase in the federal deficit triggers economic instability. As a matter of fact, a large and growing deficit can lead to economic instability, such as inflation and recessions. This can make it more difficult for families to find and keep jobs, and can erode the value of their savings.
And lastly, increasing the federal deficit will likely reduce investment in the future. In order to reduce the deficit, the government may have to cut spending on investments in the future, such as infrastructure and research and development. Cutting spending on these two factors and reallocating them to the private sector will lead to an abundance of job creation and increase economic output.
The truth of the matter is that government is way too big. Bigger than it needs to be. All these agencies and programs created, erode the purchasing power and reduce the disposable income of ordinary Americans. Hence, Biden’s wish to increase the federal deficit will only hurt more the American people than alleviate their economic woes.