It’s Biden Who Begat the Debt Crisis

Democrats’ slumping economy led to a shortfall in revenues.

AP/J. Scott Applewhite, file
President Biden and Speaker McCarthy depart the Capitol following an annual St. Patrick's Day gathering, March 17, 2023. AP/J. Scott Applewhite, file

Secretary Yellen is saying the X-date when the U.S. government runs out of money has been moved up to June 1. Normally, I wouldn’t listen to the Treasury, because it lacks so much credibility, but, checking around, the CBO also believes that government cash could run out in June, rather than July or August — so there’s a little more credibility there.  

Also, the Peterson Institute is talking June, and so is the Brookings Tax Policy Center. So, the so-called X-date — that’s the “run out of money” day — could come in June. Of course, this is very imprecise, and no one really knows.  

By the way, Speaker McCarthy and the Republican conference, which has the only debt ceiling increase plan in Washington, coupled with budget reform, got their product out in April. It’s just that President Biden won’t deal with it, and there is no other debt ceiling increase plan in Washington, D.C.  

Even the Republican Senate leader, Mitch McConnell, is telling Mr. Biden to start negotiating with Speaker McCarthy. “I think what the House has passed makes a lot of sense,” Mr. McConnell said. “He and the speaker need to reach an agreement so we can get a solution. The Senate is not a relevant player at this time. They have got to have a measure that can pass the House. How does it pass the House? It has to have the support of the speaker, and I’m behind the speaker.” 

One reason the government’s running out of cash faster than people thought is because of the slumping economy. In fact, the Biden economy in the last five quarters has produced 0.9 percent growth. In other words, less than 1 percent over five quarters, or 15 months, with a 6.4 percent inflation rate.  

That is a prolonged slump with harmful inflation. That is why Mr. Biden’s poll numbers are so bad. That’s why a Wall Street Journal columnist, Gerard Baker, is writing that President Trump could win, if people vote their pocketbooks.  

Indeed, Mr. Trump is talking about the economy at every whistle stop, and GDP doesn’t really matter to typical working families. What matters is the soaring price of groceries and gas and that inflation is running faster than their wages. That’s the key pocketbook issue.  

Because of this prolonged economic slump, year-to-date tax revenues are running $74 billion below last year, with individual tax revenues at $95 billion below. Meanwhile, federal spending — get this — is running $359 billion above last year. Yes, $359 billion.  

That is why the budget deficit for the first half of the year is running $433 billion above a year ago. The budget deficit a year ago for FY ’22 was $1.4 trillion. That’s the deficit. At this rate, we could be running for FY ’23 a deficit of somewhere between $1.7 trillion and $2 trillion. These budget numbers were compiled by a former chief economist of the White House National Economic Council, Joe Lavorgna.  

Mr. Biden says he’s cutting the deficit, but he’s getting a lifetime 10 Pinocchios for that untruth.   

I know all these numbers are boring, but I hope they paint a picture and tell a story that an inflation-prone, stagnant economy bankrupts the country. That’s where the damaging debt comes from.  

Say it again: inflation-prone, stagnant economy and continued overspending.  

Now, to get even more boring — I’ve got to tell you how exciting this is for me personally — there’s only so much the Treasury can borrow from the civil service retirement, the postal service retirement, the federal financing bank, the exchange stabilization fund, and the thrift savings plan. Actually, borrowing from these retirement plans is itself a pretty terrible idea, but that’s what happens when you have a malfunctioning economy with continued overspending and high inflation.  

This story will only get worse if Mr. Biden continues to avoid talking turkey with Speaker McCarthy, who has the best plan in town to save America’s finances. In fact, again, he has the only plan in town.  

Quit stalling, President Biden, and get down to work. Save America. Pass Mr. McCarthy’s Limit, Save, Grow Act, and quit bankrupting America. 

From Mr. Kudlow’s broadcast on Fox Business News.

The New York Sun

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