The editors of Bloomberg prescribe a does of fiscal responsibility for the federal government:
President Joe Biden and Congress should take a break from their ritualized wrangling over the debt ceiling and look closely at last week’s projections from the Congressional Budget Office. These show that an already bad fiscal outlook is rapidly getting worse. The new forecast makes the standard assumption that the policies in place won’t change — thus proving beyond a doubt that they’ll have to.
Last May the CBO projected a budget deficit of just under $1 trillion for 2023. It now expects a deficit of $1.4 trillion, or 5.3% of gross domestic product. Deficits continue to trend higher, not just in dollar terms but as a proportion of national income. The cumulative deficit over the next 10 years is estimated at $19 trillion, $3 trillion more than before. The ratio of public debt to GDP rises to 98% this year, and to 118% by 2033. After that, the debt burden just carries on growing, year in year out.
There’s a word for all this: unsustainable.
They’re dreaming. Neither Democrats nor Republicans feel any need to exercise any fiscal responsibility and, indeed, doing so would discourage the very bases they’re trying to attract.
Democrats have tied themselves to an agenda of boundless public spending while promising to shield the vast majority of households from higher taxes. Republicans want spending cuts — but not to reduce deficits. Their goal is to shrink the government, and they’re perfectly happy with ever-increasing deficits and public debt so long as tax cuts are part of the mix. Meanwhile, they think, threatening to destroy the US government’s standing with creditors is permissible.
They do make one significant observation—that higher inflation is increasing the costs of many federal programs fast than it’s increasing revenues. Meanwhile, I suspect the overwhelming likelihood is that the debt overhang will reduce GDP growth while our elected leaders hope that inflation reduces the significance of that debt overhang. That strategy hurts the very people they purport to care about most.







