Commentary
Deficit spending is not a growth tool. It is the recipe for stagnation.
The CBO projects a budget deficit of $1.9 trillion in 2024, despite anticipated economic growth and record tax revenues. They forecast revenues to reach $4.9 trillion, or 17.2 percent of GDP, in 2024, increasing to 18 percent by 2027 and remaining at that level until 2034.
The key finding of this report is concerning. Even with no recession in sight and rising tax revenues over the next decade, the budget deficit is projected to balloon from $1.9 trillion to $2.8 trillion by 2034.
The CBO estimates that the adjusted deficit will be 6.9 percent of GDP by 2034, nearly double the 3.7 percent average over the past 50 years.
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The CBO attributes the significant increase in outlays to the soaring cost of debt. They expect outlays to rise from $6.8 trillion to $10.3 trillion by 2034, accounting for 24.9 percent of GDP. Public debt is projected to increase from 99 percent of GDP in 2024 to 122 percent in 2034, reaching $50.7 trillion.
The projections from the CBO clearly indicate that the U.S. cannot balance the budget through revenue measures alone. The report underscores that no amount of increased taxes can generate an additional $2 trillion in annual receipts without impeding investment, growth, and long-term revenue potential.
An economy that runs an annual deficit of 6 percent of GDP to achieve a mere 2 percent growth rate is on an unsustainable path. The government’s spending would only increase in the event of a recession.
Americans should be concerned about the implications of continued borrowing, as it will lead to higher taxes, slower growth, and diminished purchasing power.
Deficit spending is not a viable social policy; it burdens future generations and hampers economic progress. Embracing deficit spending means accepting stagnation.
To address this trend, the U.S. needs pro-growth policies that boost GDP growth, enhance productivity, and foster business expansion.
Implementing sound monetary and fiscal policies will help the U.S. maintain its global leadership and uphold the dollar as the world’s reserve currency.
Continuing on the current path of deficit spending and monetization through central bank policies will only lead to stagnation and loss of reserve status.
The next administration must prioritize halting deficit spending and avoiding monetization through policies that inflate costs and hinder prosperity.
The current budget trajectory will result in stagnation, an oversized government, and excessive taxes. Following France’s policies will only lead to similar outcomes of low growth, high debt, and elevated unemployment.
There is no quick fix to stop the borrowing trend in the U.S. Monetizing debt will further erode the middle class and weaken the economy, perpetuating inflation as a hidden tax.
The U.S. has experienced the consequences of European-style policies and must now focus on sound money and responsible fiscal measures to avoid further decline.
Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.
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