Story by M. Garro
The federal budget deficit has doubled to $2 trillion under President Biden in just a year, significantly impacting Americans’ economy and financial well-being.
Treasury Secretary Janet Yellen announced a deficit of $1.7 trillion for fiscal 2023. However, $300 billion in student debt cancellations makes the actual deficit $2 trillion.
Last year’s budget deficit, adjusted for the same student debt factors, was less than $1 trillion, showing an alarming rise in a single year.
Remarkably, this doubling occurred without a recession or war to explain the fiscal surge.
A large part of this increase is due to inflationary spending by the federal government.
The U.S. national debt is now as big as the country’s annual economic output, known as GDP.
While inflation erodes the buying power of average Americans, the wealthiest generation is benefiting from federal spending.
Social Security, Medicare, and Medicaid. These three extensive entitlement programs saw increases in spending by 11%, 12%, and 4%, respectively.
The Federal Reserve raised interest rates to more than 5% to combat inflation, decreasing it to about 4% from near double digits.
This 4% inflation rate is still double the Federal Reserve’s target, indicating more work is needed to stabilize the economy.
The government had to pay $184 billion more in interest on the debt compared to last year due to the rate hikes.
An additional $101 billion was paid to depositors at banks like Silicon Valley Bank and First Republic, which didn’t plan for rate hikes.
The deficit ballooned partly because of a decline in federal revenue, which was down mainly due to higher interest rates.
Income tax revenue fell by 9.3% due to lower capital gains, which is attributed to stock market uncertainty.
Rising bond yields indicate creditors might stop supporting U.S. debt without higher returns, pressuring the government to curb spending.
Demographic factors and entitlement structures have pushed the U.S. towards fiscal issues for years.
Biden’s policies and the bipartisan tendency to borrow have aggravated the existing deficit problems
If the government doesn’t heed, the everyday American will bear the brunt through reduced purchasing power, higher interest rates, and financial insecurity.
This rapid increase in the federal deficit has far-reaching implications, not just for the government but for every American’s financial stability and future.
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Immediate action is needed to address these fiscal challenges and prevent further harm.
The post Federal Budget Deficit Under President Biden Doubles to $2 Trillion in One Year, Significantly Impacting U.S. Economy first appeared on Wealthy Living.