For decades both parties have opted to kick the can down the road indefinitely when it came to the national debt problem, only ever pretending to care about it – but now the Biden-Harris administration is denying that there is one at all.
Treasury Secretary Janet Yellen, who infamously described Bidenflation as “transitory” (and then had to apologize for it) is out with some even more questionable economic arguments.
According to CNBC: “Treasury Secretary Janet Yellen said the swelling national debt is manageable as long as it stays around where it is relative to the rest of the economy. ‘If the debt is stabilized relative to the size of the economy, we’re in a reasonable place,’ she told CNBC’s Andrew Ross Sorkin. ‘The way I look at it is that we should be looking at the real interest cost of the debt. That’s really what the burden is.'”
The public share of the national debt as a share of GDP is running at about 97% but is expected to soon top 100% at current spending rates. In other words, the national debt is on track to eclipse the size of the entire U.S. economy’s annual output.
Just this fiscal year alone (starting October 1, 2023), interest costs on the national debt have exceeded $600 billion, which is more than the government spent on healthcare of defense, and four times its education expenditures. In the entirety of the 2023 fiscal year, interest costs were $659 billion.
With the exception of the beginning of the pandemic and other years of the Biden presidency, the prior all-time-high for interest spending on the national debt was $468 billion in 1996 (in inflation adjusted 2024 dollars). Nearly 80% of personal income tax revenue is now going towards servicing interest on the national debt.
Yellen touted President Joe Biden’s plans to supposedly manage the situation he exacerbated by biblical proportions. “In the budget the president presented for this coming fiscal year he proposes $3 trillion of deficit reduction over the next decade,” she said. “That’s sufficient to basically keep the debt to income ratio stable, and this interest burden would be stabilized.”
The budget deficit for 2024 is running at $1.2 trillion with four months left in the fiscal year. In 2023, the shortfall totaled $1.7 trillion.
Hilariously, Biden has claimed to reduce the deficit.
While you probably don’t need to be reminded; anytime anyone hears the words “Biden” and “deficit reduction” they should be skeptical. Two years into the Biden presidency the national debt has surged by $4 trillion – yet if you listened to Biden you’d be believing that it went down by $1.7 trillion, a bogus claim he’s repeated on numerous occasions.
There is an appearance of truth to the claim if one doesn’t dive deeper into the figures; the budget deficit fell from $2.8 trillion to $1.4 trillion from fiscal year 2021-2022 for instance, accounting for most of the claimed $1.7 trillion reduction. However, in that same time period there was a $1.45 trillion drop in spending (104% of the deficit reduction) due to COVID programs either shrinking or expiring. And those are programs that would shrink or expire even if Trump were still in office, so it’s hardly anything Biden can take credit for, as he didn’t actually do anything.
Similarly, the Biden administration has pointed to the deficit of $2.8 trillion in fiscal year 2021 as being $360 billion lower than the $3.1 trillion deficit in Trump’s last year in office. But again, the deficit was supposed to decline by more if Biden had done nothing. The Congressional Budget Office estimated the deficit would’ve declined by $870 billion if the Biden administration didn’t implement any new policies and Trump’s remained in place. Or in other words, Biden contributed a disguised net $510 billion to the deficit that year.
Every single time the Biden administration has made claims about reducing the debt or deficit they’ve been lying with statistics – and it seems unlikely they’d start telling the truth now.
