May
30
2021

Pretty Ugly Pictures of the Federal Budget

(FY 2022 Version)

I haven't done this since 2011, over ten years ago. But the tools are still in place, so:

President Biden's proposed Federal budget for Fiscal Year 2022 came out last week.

Here's a graph of Federal receipts and outlays since 1977, expressed as percent of GDP, folding in Biden's proposals and predictions. Post-2020 numbers are estimates:

[In and Out]

Here's what that works out to in terms of deficit spending:

[Usually More Out]

Click on the graphs for their fullsize versions. Data is here (snipped from Table 1.2 in the "Historical Tables" document) and my Gnuplot script is here. If you'd like to see the data extended back to 1930: here's the receipt/outlays graph and here's the deficit graph.

Standard disclaimer: if you're thinking this is simple-minded, you're right. In my defense, the percent-of-GDP seems appropriate for historical comparison; it seems to be (arguably) a good measure of what we can "afford"; and, if you believe deficits "damage the economy", then it's a pretty good proxy for the level of damage.

Those innocent little squiggles do not adequately portray the fiscal difficulty we're in. If it were a feature in Gnuplot, I'd animate the graphs and set them to music, something that would convey impending doom. Simply put, Wheezy Joe Biden is proposing levels of spending and taxation unseen since World War II. (And, see below, he's proposing levels of federal debt even higher than in World War II.)

Let me recycle an observation Peter Suderman made in 2011 at Reason about Obama's proposed FY2012 budget:

In his State of the Union address last month, President Obama declared that "we have to confront the fact that our government spends more than it takes in. That is not sustainable." He was right then, and unfortunately, he's still right: The budget proposal his administration is releasing today wouldn't do much to change the facts about our country's dismal fiscal future.

Echoing the administration's line that "the easy cuts are behind us," Politico's David Rogers says Obama's 2012 budget is "long on tough choices."  That depends on how you define "tough." Jake Tapper of ABC News gives those alleged hard choices some context: "At no point in the president's 10-year projection would the U.S. government spend less than it's taking in." By the president's own definition, then, today's budget plan isn't sustainable. 

Back then, I called this dishonest and cowardly.

Biden isn't even pretending to give lip service to fiscal sustainability. So, in that sense: congratulations, Joe. You're more honest than Obama.

Let's get some more contemporary commentary. Here's Cato's Chris Edwards: President Biden’s Proposed Budget.

The Biden budget shows federal debt held by the public rising from 100 percent of GDP in 2020 to 117 percent by 2031. We are not at war, and yet that level of debt is higher than the 31 percent reached in the Civil War, 33 percent reached in World War I, and 106 percent reached in World War II.

Regarding the budget, Treasury Secretary Janet Yellen said, “I believe it is a fiscally responsible program.” Let’s scale the budget figures to family size to see how off‐​base that claim is. Biden proposes to spend $7.2 trillion this year relying on $3.7 trillion in borrowing, and he proposes to push up accumulated debt from $24 trillion this year to $39 trillion by 2031. That is like a family spending $72,000 this year putting $37,000 on credit cards, and then pushing up family debt from $240,000 to $390,000 as it continues spending more than it earns. Would any financial advisor tell the family that was responsible?

Well, no, not unless the family had a fiat currency printer in the basement. That would be illegal of course. Unfortunately, what Biden proposes is totally legal.

Philip Klein at NR notes: Biden's Budget Projects U.S. Debt Will Smash World War II Record This Year.

In 2021, according to the Biden budget, the U.S. debt will reach 109.7 percent of GDP, which would blow past the previous record of 106.1 percent, just as the U.S. was coming out of World War II. It will then exceed the record every year over the next decade, reaching 117 percent of GDP by 2031.

He's got an embeddable graph, so we'll go with that, too:

What could go wrong? Well, Dan Mitchell puts it pretty succinctly (in a longer post which you should read): The Most Disturbing Takeaway from Biden’s Budget Plan

In other words, we’re looking at trillions of dollars of additional money being diverted from the productive sector of the economy and being put under the control of politicians and bureaucrats.

That does not bode well for American prosperity. Even the Congressional Budget Office recognizes this means lower living standards for our nation.

So we'll see how that works out. Not well, I fear.

(Data table used for graphs here.)


Last Modified 2024-02-22 5:11 AM EDT