A Congressional Budget Office (CBO) report released Tuesday is projecting a massive $400 billion increase in the federal budget deficit from previous forecasts, with the fiscal year 2024 deficit expected to total $1.9 trillion. The news comes as President Joe Biden claims that his administration’s economic policies are “working” and that the U.S. has “the strongest economy in the world today.”
The CBO analysis pointed to Biden’s decision to cancel billions of dollars in student loan debt, foreign aid, increased Medicaid spending, and escalating costs of running the FDIC as the primary causes of the spiraling deficit. Over the next decade, cumulative deficits are expected to reach $22.1 trillion. The interest payments on the public debt alone are expected to eclipse $1 trillion by next year.
Experts say that Biden’s claim that the U.S. economy is strong is deeply deceptive. Dave Brat, dean of Liberty University’s School of Business, joined Wednesday’s “Washington Watch with Tony Perkins” to break down the economy’s current outlook.
“It’s absolutely false,” he said of Biden’s characterization. “The biggest indicator is productivity and economic growth. A few years back, after COVID, no one could see any true signals about the economy. The stock market’s been going up, but the underlying economy was growing at a few percent because we … printed money — $9 trillion — and then added $2 trillion deficits [in] fiscal spending. So it’s just lopping on another 10% to your economy, borrowing it from Uncle Sam over here, and shoving it over here into the government accounts.”
Brat continued, “And of course, you can say because government spending counts as economic growth, that the economy is doing well. Well, it’s not doing well now. Economic growth has shrunk from 4[%] to 3 to 2, and now below 2. CBO has future growth for 30 years at 1.5%, because our capital stock is now smaller than China’s. Think of Henry Ford and the assembly line. If you put capital in the hands of the American worker, they do great. We have 40% illiteracy rates across our inner cities for reading, so they can’t go on and make progress as kids and human beings and children of God.”
Brat went on to point out that a large part of the economy’s weakness is due to severely lopsided income distribution, which the Left has been notably silent on as of late.
“[F]ive firms have captured 60% of the returns on the stock market, and all those five firms are owned by BlackRock and Vanguard and State Street and all these leftist entities that are pushing ESG and China on everybody,” he remarked. “So a few firms are doing great. The problem with the tech and the stock ownership is that the wealthy 10% own 90% of the stocks and bonds. … [Y]ou [used to be able] to count on the liberals to cover that part of the story, the income distribution piece.”
As Brat further observed, ongoing inflation and uncertainties in commercial banking are also adding to a concerning economic outlook.
“[T]he middle class is being crushed, mainly by inflation … losing 20% of your purchasing power,” he explained. “That’s not only your check, that’s your entire retirement account just lost 20% of its purchasing power. … The stock market keeps going up, [but] that’s going to come to an end. There’s fragility in the commercial banking sector. [In] Japan, a bank just had to write down $70 billion last night, and that’s coming our way too. … The real economy is very, very weak. Some ask whether we’re even in recession and don’t know it yet. The stock market will roar on as long as it can until we have another financial collapse.”
Polling data suggests that the economy is the top issue of concern for voters heading into the November elections. An Economist/YouGov survey conducted last week found that inflation (22%) and immigration (14%) were the two most important issues for voters. Brat noted that economic worries have been so persistent, in fact, that even pro-Biden mainstream media outlets have been forced to cover the issue.
“[T]he one thing that does matter is the gasoline price and inflation in general,” he emphasized. “All the mainstream media, the Axios’s and the CNN’s were writing letters and doing news pieces, talking to the White House six months ago, a year ago, saying, ‘Hello, wake up. Inflation. The American people are very upset with you right now because you’ve told them nothing about your plans to get rid of inflation.’ And so that one will last.”
Brat went on to detail how the border crisis and economic concerns have led to political realignment within the American electorate.
“[W]hen you add the border invasion and the negative economic effects on the African American community, the Hispanic community, [they] are flooding over to this new realignment of the middle class under the Republican populist piece, the Hispanics even more so,” he underscored. “And so the Left is just running scared right now and imploding. … [I]n the past, if the Republicans would have got[ten] 5% more of the minority vote, they would have won. Now it’s in the 20% range based on the economy.”
Brat concluded by highlighting how job market complexities will also likely play a considerable factor at the ballot box in November.
“[A]ll the new jobs in the past year have been part-time; full-time jobs have actually decreased,” And then over the past four years, all of the net new jobs have gone to foreign-born workers. … [T]hat is why we’ve got a lot of new friends in this new coalition. … [I]t’s this new populist Republican [movement] that cares about people and the middle class. And I think you’re going to see a major realignment in the votes this coming November because of those economic factors.”
Dan Hart is senior editor at The Washington Stand.
