Trillion-dollar deficits: Biden’s new normal
It's time for the president to meet Republicans at the negotiating table
I will leave the Biden reelection announcement to the Twittersphere to discuss. Instead, focusing on one of the most important issues Biden never mentioned in his Tuesday announcement video: the economy, specifically the country’s staggering debt, a looming catastrophe waiting to happen. As the debate over the debt ceiling and fiscal discipline rages on, here are five key economic factors to keep in mind in the coming weeks.
But before I do that let me provide a bit of context to the scale of the numbers being discussed, as billions and trillions are huge numbers. The next million seconds will take 11.6 days. The next billion seconds is 31.7 years. The next trillion seconds is 317 centuries. So, in the context of talking about federal spending, in 2022, the U.S. government spent $6.2 trillion. With that, let’s jump into the data.
Biden has normalized the COVID-19 2020 emergency budget
The president and his White House have taken the 2020 COVID-19, one-time-only crisis budget as his administration’s working baseline, rather than the pre-Covid 2019 budget, which had a significant $4.4 trillion price tag.
In 2020, because of the pandemic, the budget jumped 47 percent to $6.5 trillion, as both Democrats and Republicans supported the need for emergency funding. That COVID funding was to sunset as the country returned to normal — as it did last year. Apparently, Biden decided to ignore that crucial point.
Instead, he saw that supersized budget in 2020 not as a crisis, but an opportunity that could be exploited going forward to pay for what amounted to a historic spending spree that kicked off with the $1.9 trillion American Rescue Plan and drove what became the worst inflation in 40 years. During Biden’s first two years in office, he oversaw spending that was 40 percent higher than the pre-COVID 2019 budget.
Biden’s add to the national debt outdoes Trump
According to the CBO, Biden is going to match Trump’s addition to the national debt in just three years, reaching a total of $7.1 trillion over his four years. That would be $1.5 trillion more than Trump contributed during his term, which included the 2020 one-time COVID emergency spending. If Biden’s 2024 proposed budget actually passed, he would add as much to the national debt as Trump and Bush 43 combined. House Republican leaders have made clear his budget isn’t going anywhere; but it illustrates just how out of control Biden’s spending policies really are.
Yearly federal revenues increased 43 percent in two years
In dealing with the debt and deficit, President Biden has had the advantage of a 43 percent increase in federal tax receipts from 2020 to 2022, thanks to the 2017 Tax Cuts and Jobs Act. In 2020, federal income tax revenues were $3.4 trillion. In 2022, they increased to a record $4.8 trillion. Revenues from both individual income taxes and corporate income taxes were the highest they have ever been.
Individual income tax revenues were over $2 trillion in 2021 and 2022 for the first time — a 64 percent increase in 2022 over 2020. Contrary to Biden’s constant complaint that business doesn’t pay its fair share, revenues from corporate income taxes in 2022 were over $400 billion, also for the first time, and an increase of 101 percent over 2020.
Biden could have been close to a balanced budget
If Biden had returned to the 2019 pre-COVID spending levels and rejected the trillions of dollars in excess spending that has characterized his first two years, he could have come much closer to a balanced budget for 2022. Adjusting the 2019 spending for inflation, and given the remarkable increase in revenues, the deficit in 2022 would have been only $194 billion instead of a deficit of $1.3 trillion.
However, given the direction of current spending, the CBO baseline projects the annual deficit will be over $1 trillion dollars through 2029, and then it goes over $2 trillion dollars for the years spanning 2030-2033.
Future proposed yearly spending could top $10 trillion
Worse, CBO baseline spending projections show that Biden’s proposed budgets for the next two years will continue the $6 trillion-dollar spending of 2020 and drive it even higher through the rest of his term and beyond.
Biden’s own proposed 2024 budget would be 55 percent higher than Trump’s spending in 2019, and his budget projections are even more alarming. His 2024 proposed budget has spending that will reach the $7 trillion threshold in 2025, $8 trillion in 2028, $9 trillion in 2031, and $10 trillion in 2033.
Biden’s political decision to propose these levels of spending, despite the current $31 trillion federal debt, shows how important it is for Congress to clearly establish some level of fiscal discipline. The CBO baseline is projecting that if things stay on the current path for the next 10 years (2024-2033), the debt will be increased by $20.2 billion. Translating that from dollars into seconds that would be 6.4 centuries.
So it should not be surprising that the new majority in the House wants to define policies that will create a trajectory toward some level of fiscal discipline, in combination with raising the debt ceiling. But Republicans have run into problems as Biden refuses to even discuss the House majority’s proposals.
Instead, the president wants a “clean” debt ceiling vote without provisions to rein in spending, hardly surprising from someone who has just proposed a budget that includes reaching a record $10 trillion in spending by 2033. In fact, Biden’s 2024 budget proposal also projected that when that $10 trillion mark is reached, the deficit for that year will be over $2 trillion.
I’ve thrown more than a few numbers out there but when it comes to the debt ceiling debate, these are important in the face of White House resistance to even discuss either the debt or the deficit. In speech after speech, Biden seems unwilling to address the extensive inflationary effects of his spending policies or their potential negative economic impact on future prosperity.
Given that both the CBO and Biden’s numbers show trillion-dollar deficits as far as the eye can see, perhaps it is time for the president to find a way to come to the table and discuss how to address this challenge — rather than accepting trillion-dollar deficits as the new normal.
David Winston is the president of The Winston Group and a longtime adviser to congressional Republicans. He previously served as the director of planning for Speaker Newt Gingrich. He advises Fortune 100 companies, foundations, and nonprofit organizations on strategic planning and public policy issues, as well as serving as an election analyst for CBS News.