Biden Budget Proposes $17 Trillion in Deficits Over Next Decade

President Joe Biden talks about his proposed FY2024 federal budget during an event at the Finishing Trades Institute in Philadelphia, Pa., on March 9, 2023. (Chip Somodevilla/Getty Images)

President Joe Biden revealed the third budget of his presidency, proposing to spend $6.8 trillion and raise taxes by approximately $5 trillion. Despite being promoted as a deficit-reducing plan, the White House forecasts trillions in budget shortfalls over the next decade.

According to the administration’s projections (pdf), the U.S. government would record $17.055 trillion in federal deficits by 2023. This includes a $1.8646 gap in the fiscal year 2024 budget, representing 6.8 percent of GDP.

The White House estimates that the federal government would accumulate $10.21 trillion in interest payments.

Federal debt held by the public is expected to soar beyond $43.6 trillion in 2023, accounting for more than 102 percent of the GDP. The national debt would also climb above $50 trillion, raising the debt-to-GDP ratio to 127.6 percent.

In addition, when compared to last year’s budget (pdf), the president had projected nearly $14 trillion in additional deficits and debt over ten years, which would potentially offset the purported $3 trillion in savings.

According to an analysis from the Committee for a Responsible Federal Budget (CRFB), debt outlined in the president’s budget would “grow to a new record as a share of the economy over the next decade.”

“Debt would continue to rise unsustainably under the President’s budget, reaching a new record of 110 percent of GDP by 2033,” the CRFB wrote in a report. “This debt level is likely to be even higher under CBO’s forthcoming re-estimate of the budget and would rise even further if various expiring tax cuts are continued without additional offsets.”

U.S. Treasury Secretary Janet Yellen speaks as she and her Italian counterpart Giancarlo Giorgetti hold a bilateral meeting on the sidelines of the G20 Summit in Nusa Dua on the Indonesian resort island of Bali on Nov. 16, 2022. (Adek Berry/AFP via Getty Images)

Treasury Secretary Janet Yellen was asked about these numbers during Friday’s House Ways and Means Committee hearing.

“You’re saying our policies created higher deficits than then you had projected last year. And now we’re going to take credit for reducing those higher deficits,” Rep. Lloyd Smucker (R-Pa.) told Treasury Secretary Janet Yellen at the House Ways and Means Committee hearing on Friday.

“This budget does nothing,” he added. “In fact, it adds to the deficits and debts that we’ve been experiencing.”

Yellen struggled to address this point, explaining that the $3 trillion is “relative to where we were before this budget was issued and the deficits that we would have seen.”

The former head of the Federal Reserve has expressed concern over debts and deficits in the past.

In 2018, speaking with CNBC’s Steve Liesman at the Charles Schwab Impact Conference, Yellen called the U.S. debt path “unsustainable.”

“If I had a magic wand, I would raise taxes and cut retirement spending,” she said.

During her nomination hearing in 2021, Yellen acknowledged in an exchange with Sen. John Thune (R-S.D.) that “eventually we’re going to have to deal with the issue of debt.”

“I think there’s no single metric that summarizes our overall fiscal situation, but one metric that I do think is useful to keep in mind is the interest burden of the debt—what share of our economy of GDP is going to pay interest on the debt,” Yellen told Sen. James Lankford (R-Okla.) in a separate exchange.

“The higher that gets, the more we find we have to use tax revenue just to pay the interest on the debt, and eventually that can lead to having to curtail other services, other spending, or eventually lead to runaway debt accumulation. That would be an unsustainable path,” she said.

In its recent Budget and Economic Outlook report, the Congressional Budget Office (CBO) forecasted that annual deficits average $2 trillion over the 2024–2033 period.

“Measured relative to the size of the economy, the deficit equals 5.4 percent of gross domestic product (GDP) in 2023, and deficits average 6.1 percent of GDP from 2024 to 2033. As a result of those deficits, federal debt increases each year in CBO’s projections, rising from 98 percent of GDP this year to 118 percent in 2033,” the CBO stated.

By comparison, the 2024 budget projects that annual deficits will average $1.705 trillion.

Vance Gin, the founder and president of Ginn Economic Consulting, recently opined in a piece for the American Institute for Economic Research (AIER) that if these deficits continue to accelerate, then the “Federal Reserve will, at some point, be forced to monetize this new debt at such a scale that the post-pandemic inflation will seem mild by comparison.”