We have been following the spending spree on Capitol Hill for years. Even before the pandemic, both the Trump Administration and Congress seemed to dispense with any notion of restraint on spending. The result is a towering debt that now exceeds our gross domestic product. The situation is worsening by the day as both the White House and the Congress seek massive new spending. The federal government spent a record $6,551,872,000,000 in fiscal 2020. That is a 45.4% increase from 2019 — an addition of $2,044,283,520,000 above the previous record of $4,507,588,480,000. The budget deficit has now tripled. Yet, there is no indication that the spending spree will end. Trillions of additional spending have been pledged by Democrats for programs ranging from free college to new environmental programs to bail outs for cities. The Trump Administration has pledged even greater tax cuts as the country struggles with a debt load that could be a burden for generations.
I have long admitted to being socially liberal and fiscally conservative. However, at some point, a modicum of rationality will have to take hold of our economic policies. The U.S. budget deficit tripled to a record $3.1 trillion in the fiscal year that ended Sept. 30. There is no question that we have to add debt to deal with our citizens struggling in this pandemic. While we would have been in a better position if the White House and Congress had not spent wildly before the pandemic, we have to address the ongoing crisis for our population. Yet, trillions for new programs are being pledged for 2021 and the rising debt is being largely dismissed.
When measured against economic output, the budget gap in fiscal year 2020 is now 16.1% and the most conservative estimate puts the federal debt at 102% of gross domestic product.
In the meantime, the White House is demanding another $1.88 trillion and House Democrats are demanding another $2.2 trillion bill. The Treasury selling new securities in utter abandon, pushing total government debt held by the public to reportedly $21 trillion. That is a 25% increase from the beginning of the fiscal year. (Note some put the debt higher than $21 trillion).
This will not end well.