SCARY: Economics expert explains what will happen to Americans if our national debt continues to grow
Joe Biden says a lot of crazy things, but perhaps the craziest is his claim that he’s lowered the U.S. deficit, which Stu Burguiere says “couldn’t be farther from the truth.”
Brian Riedl, senior fellow at the Manhattan Institute and an expert in budgeting, taxes, and economic policy, confirms that Biden is indeed lying.
“Last year, the deficit doubled from $1 trillion to $2 trillion – the largest share of the economy in American history, outside of wars and recession,” he tells Stu, adding that despite what Biden says, “the deficit is growing enormously.”
“The president has already added $5 trillion to 10-year deficits if you add up all the legislation he's signed. The fact that he claims he's reducing deficits is completely and mathematically absurd,” he continues.
“I assume what [Biden] is trying to do here is just compare it to peak COVID spending,” says Stu, “which of course is spending that he wholeheartedly approved and actually wanted more of.”
“The proper way to measure deficits is how they're doing compared to the baseline that was already expected by budget estimators,” Riedl says. “When the president took office, the Congressional Budget Office said the deficit will automatically fall to $ trillion and stay there for the next couple of years with the pandemic ending. Instead, [Biden] ran a $2 trillion deficit, so he's growing the deficit above the baseline, not reducing it.”
So just how bad is the situation?
According to Stu, “long-term, this gets incredibly ugly, really, really fast” and is “completely unsustainable.”
Riedl confirms this: “Yes, long-term, the numbers are totally unsustainable. If you assume current policies are extended, the budget deficit is going to go to 14% of GDP per year in a couple of decades. Historically, it's been 3% of GDP. The debt could grow to 200%-300% of the economy, depending on interest rates.”
Those are scary numbers. So what does that mean for the average American when the debt gets that big?
“It means that as much as half to two-thirds of your taxes will go into paying interest on the debt within the next couple of decades,” says Riedl, “and in fact, if interest rates keep rising, there's a scenario in which 100% of your taxes will just go into paying interest on the debt, as it becomes the biggest program in the entire budget.”
Further, granted “the path we're on, middle-class taxes will eventually double.”
“That's the danger of having debt go to 200%-300% of GDP. And that's the situation that the president is doing nothing about and in fact is pouring gasoline on the fire,” Riedl warns.
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