After Joe Biden took office, inflation soared, made even worse by supply chain issues and Biden’s energy policies.
By the end of Fiscal Year 2023, the deficit was $1.7 trillion, a 23% increase over the previous year, with roughly half that going to service federal debt.
Many economists fear the worst is yet to come.
One of the biggest problems that Biden created was the refusal to go back to pre-pandemic spending. Not only that, but the government is being very deceptive in presenting this.
For instance, the Biden administration claimed it had trimmed the deficit by $1 trillion when that is actually not the case. It was $1 trillion less than COVID spending, but that was supposed to be a one-time thing, not a measuring stick for a "normal" spending year.
Not only that, but Biden had projected $5 trillion in government receipts, but the final number was $4.4 trillion, coupled with $6.1 trillion in spending, as Biden has more or less removed COVID spending and put his own programs in those slots. This has created 38% more spending than the levels we were at before the pandemic hit.
Sadly, if you see Biden’s proposed budgets, the spending will not get cut back. If anything, it will only increase now that we are going to be supporting Israel in its war against Hamas.
Keep in mind, this deficit would be much worse if the Supreme Court had not blocked Biden’s student loan handout, but Biden has since used other loopholes to piecemeal his forgiveness plan.
We have seen the Fed increase interest rates by record levels over the last two years, and while that does tend to curb spending and allow the economy to play catchup, there is an economic bomb just waiting to go off on the other end of this.
Those increases result in much higher mortgage and credit card rates, which start to put consumers in a hole they are never able to dig out of. At some point, they are just paying interest on credit card debt, especially now when most bank accounts are going backward.
This, coupled with a continuous accumulation of new debt by the Treasury, is setting a landmine for Bidenomics that is unavoidable.
E.J. Antoni is a public finance economist at the Heritage Foundation, a senior fellow at the Committee to Unleash Prosperity, and an economist at the Texas Public Policy Foundation summed it up best.
“Two-thirds of Americans disapprove of the economy today. Since Biden took office, the typical American family has effectively lost $7,300 in annual income. The monthly mortgage payment on a median price home has more than doubled. It will cost 25 percent more to heat your home this winter. Rents are at record highs. Americans are drowning in over $1 trillion of credit card debt.
“But while the family budget deteriorates to finance a burgeoning federal budget, the Treasury fiddles as the nation’s finances burn around it. We’re running out of time.”
I am not a financial expert by any means, but these tea leaves are not hard to read.
These three years have been brutal for all of us, and like most of you, rising costs have seen my bank account go backward instead of forward. Add in a major medical procedure, and that emergency fund is just about empty.
For consumers, my main concern right now is credit card debt, as this country topped $1 trillion for the first time in history. It is only a matter of time before people start defaulting, and we have seen how that plays out in 2008.
The very people Biden says he is helping, “the middle,” are getting crushed right now, and as goes the middle class, so goes our economy.
When you add that Christmas is right around the corner and instead of doing without, most people will go deeper into debt, a crash is inevitable.
Is there still time to fix this? I would say yes, but there are only a few grains of sand left in that hourglass.
I have already been taking measures to protect myself from what I believe is inevitable, such as moving money over to high-interest money markets and short-term high-yield certificates.
For those who are retiring soon or are already in retirement, I would highly recommend you have a very serious conversation with your financial adviser to see what you can do to protect your money. Better to be safe than to ignore the warning signs and lose everything.