The federal government started fiscal 2022 the same way it ended fiscal 2021 — spending itself into a massive budget shortfall.
The budget deficit for October came in at $165.1 billion, according to the most recent monthly Treasury statement.
This comes on the heels of the second-largest annual budget deficit in history. The federal government spent $2.77 trillion more than it took in during fiscal 2021.
Of course, the spending isn’t slowing down.
The Biden administration blew through nearly half a trillion in October. Spending came in at $449 billion. That represented 36.8 percent of total expenditures for the month.
As of Nov. 10, the national debt hovered just shy of $29 trillion at $28.91 trillion.
The U.S. government added $480 billion to the debt in October after Congress passed a bill increasing the federal debt ceiling by that amount. The federal government has already run up against the new borrowing limit. It can limp along with the current ceiling in place temporarily using “extraordinary measures.” Uncle Sam will reportedly run out of money in early December.
Congress will almost certainly run the debt ceiling saga to the brink, but it will undoubtedly raise the spending limit. When it does, the Treasury Department will go on another massive borrowing binge.
And there is no end in sight to the spending. Congress has already passed a massive infrastructure bill and it continues to haggle over the “Build Back Better” bill. Supporters of these big spending plans promise tax increases and government savings will “pay for” the spending. But it’s almost certain tax receipts will fall short of projections and spending will be even higher than budgeted. That’s hove government always works.
A lot of Republicans want to blame Joe Biden for all of the spending. Of course, he’s part of the problem. But the Trump administration approached a $1 trillion deficit in 2019, before COVID-19. Spending is a bipartisan passion.
This prospect of continued spending raises an important question: how will the U.S. Treasury Department continue to borrow at this pace with the Federal Reserve tapering its bond purchases? In an interview on RT Boom Bust, financial expert Peter Schiff said it can’t. The Fed will “back the truck up” and do even more quantitative easing.
The Fed is going to have to expand its asset purchase program to buy up all these bonds that are going to be sold to finance all this spending.”
This doesn’t bode well with inflation already sizzling hot.
According to the National Debt Clock, the debt to GDP ratio is 125.94 percent. Despite the lack of concern in the mainstream, debt has consequences. More government debt means less economic growth. Studies have shown that a debt to GDP ratio of over 90 percent retards economic growth by about 30 percent. This throws cold water on the conventional “spend now, worry about the debt later” mantra, along with the frequent claim that “we can grow ourselves out of the debt” now popular on both sides of the aisle in D.C.
Every American citizen would have to write a check for $86,985 in order to pay off the national debt. That’s $164 more than last month.