The Congressional Budget Office (CBO) has projected federal budget deficits are set to remain at continuing levels higher than “at least 1930.” The report takes into account the reductions in spending deficits from COVID pandemic peak levels, meaning the “new normal” for federal spending includes monstrous borrowing on an ongoing basis.
Joe Biden has spent much of 2022 attempting to put an attractive spin on the country’s economic condition by saying that he has personally brought down federal deficits. The reality is that he has simply been in the White House as the more than $6 trillion in deficit spending the federal government threw at the pandemic has been winding down.
Even though the spendaholics in Washington are not currently running annual deficits in the $3 trillion range, the CBO is projecting deficits near or in excess of $1 trillion for the foreseeable future. Deficits are expected to average $1.6 trillion annually for the next decade. By 2032, current spending will produce a $2.3 trillion deficit.
Those projections over the next 10 years would average 5.1% of America’s gross domestic product (GDP), the value of everything the entire U.S. economy produces. Over the last 50 years, the annual federal deficit has averaged 3.5% of GDP.
The CBO projections assume that inflation as measured by the Consumer Price Index (CPI) for 2022 will come in at only 4%. It also assumes that GDP will grow by 3.1% in 2022. However, the Bureau of Labor Statistics reported that the 12-month CPI in April stood at 8.3%, and GDP fell by 1.4% over the first quarter of the year.
The CBO reports that deficits have not run at such percentages over any five year period since at least 1930. That was the first year for which the government has such data available. In other words, there is no information showing greater deficits in U.S. history than those projected over the next decade.
The total national debt is projected by CBO to run near 100% of the country’s GDP every year, exceeding the record set by that metric during World War II. The ratio of GDP to federal debt is more than double what it was in 2000.
The national debt currently sits at around $30.47 trillion. That amounts to more than $91,500 for every U.S. citizen and around $243,000 for every federal taxpayer.