When President Joe Biden took office, the Congressional Budget Office (CBO) estimated that the federal government was on pace to run a $12.1 trillion deficit over the following 10 years.
But thanks to a boatload of new spending passed by Congress and signed by Biden during his first 16 months in the White House, that figure has climbed to about $14.5 trillion. In short, Biden has overseen a $2.4 trillion increase in America's longterm budget deficit.
One way or another, that shortfall has to be accounted for by cutting spending, raising taxes, or printing money. So what does the new Inflation Reduction Act do to address the problem?
It doesn't cut unnecessary spending or wasteful government programs. Instead, it raises taxes. And those tax increases will only reduce the deficit by about $300 billion. That's just 2 percent of what the government is forecasted to borrow over the decade after Biden took office.
In other words, even if you assume Congress won't further hike spending, we'd still need about 50 more bills just like the Inflation Reduction Act to avoid adding more debt in the next decade. And that doesn't even address the $30 trillion in debt the country has already accumulated.
Even that small deficit reduction requires a massive corporate tax increase that will hurt the economy. There's also a plan to squeeze more money out of taxpayers by hiring 87,000 new IRS agents and beefing up the agency's audit powers.
This bill is indeed the first major piece of legislation to move through congress that would have even a slightly positive impact on future federal deficits since at least the middle of the Obama years. But it's not a serious attempt to grapple with our coming fiscal nightmare.
The actual drivers of future deficits are entitlement programs. President Biden and Congress are doing nothing to reform the programs that account for about half of the longterm budget deficit: Medicare, Medicaid, and Social Security. Thirty-six trillion of the 72 trillion dollars the federal government is expected to spend over the next 10 years goes to pay for these programs. Social Security and Medicare, in particular, are expected to ring up massive budget deficits over the next decade because they're structured like a Ponzi scheme in which current workers are paying the benefits of today's beneficiaries. A massive wave of older Americans are retiring and beginning to receive benefits, and there aren't enough working-age Americans to cover what they're owed. The system is starting to collapse.
Yes, $300 billion might sound like a lot of money, but in the context of government spending under Bush, Obama, Trump, and Biden—as well as the exploding costs of eldercare entitlements—it's not very much at all.
Music Credits: "Everytime," by Ben Fox via Artlist.
Photo Credits: Neon Tommy, CC BY-SA 2.0, via Wikimedia Commons; Bill Clark/CQ Roll Call/Newscom; Ron Sachs—CNP/Polaris/Newscom; Michael Brochstein/Sipa USA/Newscom; N Giovannucci, CC BY-SA 4.0, via Wikimedia Commons; Tulane Public Relations, CC BY 2.0, via Wikimedia Commons; Craig Michaud at English Wikipedia, CC BY 3.0, via Wikimedia Commons; CNP/AdMedia/SIPA/Newscom.
Written and narrated by Eric Boehm. Edited by Regan Taylor.