The White House projected in its latest budget proposal that the U.S. government will add trillions of dollars more to the national debt over the next decade amid sky-high annual budget deficits.
President Biden predicted that the government shortfall would decrease by $3 trillion over the next decade, by deploying tax hikes on the wealthy, closing loopholes, and “cutting wasteful spending on Big Pharma, Big Oil, and other special interests.”
“The president’s budget improves the nation’s fiscal outlook and reduces long-term fiscal risks by reducing the deficit, stabilizing deficits and debt as a share of the economy over the long run, and keeping the economic burden of debt within historical norms,” the White House said in a statement.
The federal government is expected to record annual deficits of more than $1 trillion each year, accounting for roughly 4 percent of the gross domestic product (GDP). This is 20 percent above the 50-year average. Cumulatively, budget shortfalls will total $16.3 trillion, fueled by $86.6 trillion in outlays and $70.3 trillion in revenues.
The Congressional Budget Office (CBO) recently reported in its latest Monthly Budget Review that the February budget shortfall was nearly $300 billion. The federal government’s fiscal year-to-date deficit is already $830 billion.
The national debt is anticipated to reach $53 trillion by 2034, according to the president’s budget, representing more than 123 percent of the GDP.
According to the latest Treasury Department data, the national debt stands close to $34.5 trillion, up roughly $6.5 trillion since President Biden took office. If the fiscal year 2025 budget projections are accurate, the national debt will soar by approximately 53 percent in the next 10-year span, according to the president’s plan.
A notable White House projection is the size of net interest payments.
Annual interest charges will surpass $1 trillion beginning in 2026, making debt-servicing costs one of the top federal spending items, the White House forecasts.
The current administration estimates cumulative net interest payments will exceed $12 trillion over the next 10 years, averaging more than 3 percent of the GDP.
Even with the assumption of higher interest rates, net interest as a percentage of the economy remains well within the historical range, according to Jared Bernstein, chair of the White House Council of Economic Advisers.
“We consider that to be a positive indicator of fiscal responsibility,” Mr. Bernstein told reporters.
While speaking at a campaign event in Georgia on March 9, President Biden promised that the Federal Reserve would lower interest rates, although he did not offer a timeline. The U.S. central bank has refrained from predicting when it would pull the trigger on a rate cut in the current cycle.
The White House projects that three-month Treasury bill rates will average 5.1 percent this year, before slowing to 4 percent in 2025 and 3.3 percent in 2026.
Republicans Try to Beat Biden to the Punch
Last week, House Republicans released their fiscal year 2025 budget proposal, with $14 trillion in federal spending cuts at the centerpiece. The congressional GOP proposed balancing the budget within a decade by abolishing green energy subsidies and student loan forgiveness while cutting taxes.The budgetary framework would trim the national debt, generate a $44 billion budget surplus for fiscal year 2034, and spur economic growth by reducing taxes.
The House Republican budget proposal is forecast to reduce interest costs by $2.7 trillion over ten years.
Fiscal Sustainability Concerns Abound
Several top GOP officials sounded the alarm surrounding the latest debt projections.“Biden’s fiscal year 2025 ”budget“ adds another $8 TRILLION to our debt over the next five years alone!” said Sen. Rick Scott (R-Fl.) on X. “This isn’t a budget. It’s another reckless tax and spending spree packed with this admin’s political wish list, bad policies and no solutions to save Social Security.”
House Speaker Mike Johnson (R-La.) called President Biden’s proposed budget “another glaring reminder of this administration’s insatiable appetite for reckless spending and the Democrats’ disregard for fiscal responsibility.”
“Biden’s budget doesn’t just the miss—it is a roadmap to accelerate America’s decline,” Mr. Johnson said in a joint statement with House Majority Leader Steve Scalise (R-La.) and House Majority Whip Tom Emmer (R-Mn.)
The first step to start addressing the fiscal pressures is to achieve an economic growth rate of at least 3.0–3.5 percent, said Stephen Moore, the co-founder of the Committee to Unleash Prosperity and a former economic adviser to former President Donald Trump.
“We’ve been growing at about half that level under Biden. And then what happens is the economy grows faster than the debt. That’s happening now, and that’s why we’re in this really dangerous death spiral,” Mr. Moore told The Epoch Times.
The next measure is to “start taking a chainsaw” to many “worthless government programs or programs that are completely ineffective.”
Mr. Moore also outlined other panaceas for the growing debt and deficits, such as eliminating President Biden’s $350 billion green energy slush fund and utilizing the Penny Plan to cut a penny every year from each government program.
“You do that for five years, and the budget starts to really shrink, and you put this debt problem behind us,” he stated. “I think most agencies could live with 99 cents on the dollar and then 98 cents, 97 cents, and 96. Then you just kind of slowly and gradually shrink the government so that we can pay our bills.”
Maya MacGuineas, the president of the Committee for a Responsible Federal Budget (CRFB), thinks it would take close to $8 trillion of savings “just to stabilize the debt over the next decade.”
“It’s dangerous that we’ve let things get this bad, and we need to treat it like the priority that it is,” Ms. MacGuineas said, adding that President Biden “deserves credit” for extending deficit reduction proposals and paying for some new initiatives.
“But the budget doesn’t go nearly far enough,” she said.
According to E.J. Antoni, a Heritage Foundation economist, the budget is “nothing but more of the same” as it contains more spending and borrowing.
“They think we’re going to double taxes essentially over the next decade and that we’re somehow going to have robust economic growth that comes out of that,” Mr. Antoni told The Epoch Times.
He added that the White House is assuming more printing by the Federal Reserve.
“In other words, much more inflation.”
Despite money supply growth contracting since November 2022 and hitting bottom in April 2023, it has since reaccelerated. The U.S. money supply (M2) is still about 37 percent higher than before the coronavirus pandemic.
