{"id":2224916,"date":"2024-04-19T03:11:02","date_gmt":"2024-04-19T07:11:02","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/trillion-dollar-deficits-explain-why-inflation-keeps-hitting-american-families\/"},"modified":"2024-04-19T03:18:29","modified_gmt":"2024-04-19T07:18:29","slug":"trillion-dollar-deficits-explain-why-inflation-keeps-hitting-american-families","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/trillion-dollar-deficits-explain-why-inflation-keeps-hitting-american-families\/","title":{"rendered":"Explaining How Trillion-Dollar Deficits Impact Inflation on American Families"},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"&quot;\"><div class=\"counts mashsbcount\">18<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Ftrillion-dollar-deficits-explain-why-inflation-keeps-hitting-american-families%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=2224916&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47--><p>The summary discusses the impact of <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/4-lies-youve-been-told-about-bidens-new-budget-proposal\/\" title=\"4 Lies You\u2019ve Been Told About Biden\u2019s New Budget Proposal\">trillion-dollar deficits<\/a> on inflation, interest rates, and the economy, as revealed in reports from the Congressional Budget Office (CBO). It highlights\u2063 the short-term inflationary pressures caused \u200cby persistent deficits and the <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/in-ohio-voters-to-decide-how-easily-theyll-let-pro-abortion-interest-groups-change-their-constitution\/\" title=\"Ohio voters will determine the level of ease for pro-abortion interest groups to amend their constitution.\">long-term \u200bconsequences<\/a> of accumulating debt, pointing to challenges \u2062in managing the economy for future generations. The summary delves into how trillion-dollar deficits affect inflation, interest rates, and the economy\u2064 based on Congressional Budget Office \u200c(CBO) reports. It emphasizes the short-term\u200c inflation challenges from ongoing \u2064deficits and the long-term repercussions of mounting debt, underscoring the complexities of economic management for future generations.  <\/p>\n<p class=\"readmore\">\n    <button onclick=\"showReadMore()\" id=\"readmorebtn\">Read more&#8230;<\/button>\n<\/p>\n<hr id=\"line\">\n<span id=\"more\"><\/p>\n<p><?xml encoding=\"utf-8\" ?><?xml encoding=\"utf-8\" ?><?xml encoding=\"utf-8\" ?><\/p>\n<div class=\"article-content\">\n<p>Economists sounded surprised recently when inflation remained above expectations for the third straight month, likely keeping interest rates elevated for the foreseeable future. If they looked in Washington\u2019s direction, they shouldn\u2019t be.<\/p>\n<p>Two reports from the Congressional Budget Office (CBO) explain the dilemma our economy faces. In the short term, significant and persistent deficits caused by Washington\u2019s spending keep fueling the inflationary fire. In the longer term, the debt accumulated by all those deficits will make our economy stagnant for future generations.<\/p>\n<div class=\"fdrlst__b89e9-paragraph-2-long d-flex justify-content-center\" style=\"margin-left: auto; margin-right: auto; text-align: center; \" id=\"fdrlst__b89e9-1309784754\">\n<div id=\"div-gpt-ad-1379703300879-0\" class=\"mb-30\"><\/div>\n<\/div>\n<div class=\"fdrlst__b89e9-44ea7638fce0a834d0804c803e1ea9e2 fdrlst__b89e9-paragraph-2\" id=\"fdrlst__b89e9-44ea7638fce0a834d0804c803e1ea9e2\"><\/div>\n<h2 class=\"wp-block-heading\"><strong>Trillion-Dollar Deficit<\/strong><\/h2>\n<p>The <a href=\"https:\/\/www.cbo.gov\/system\/files\/2024-04\/60115-MBR.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">first CBO report<\/a> examined the federal government\u2019s financial accounts halfway into the fiscal year. Six months into the budget cycle that ends this Sept. 30, Washington has already racked up a deficit of <em>over $1 trillion<\/em>.<\/p>\n<p>Granted, the federal government will likely run a surplus in April, given that many individuals either pay their remaining 2023 income taxes, and\/or <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/joe-and-jill-biden-dodge-medicare-and-social-security-taxes-again\/\" title=\"Joe and Jill Biden once more avoid paying Medicare and Social Security taxes\">make quarterly estimated payments<\/a> for their 2024 income taxes, on April 15. But CBO also notes that, after adjusting for various timing shifts, the deficit for the first half of the fiscal year exceeds last year\u2019s fiscal shortfall.<\/p>\n<p>And even though Democrats would have you believe that tax cuts cause all fiscal ills, the growth in the deficit happened even as revenues grew by 7 percent. One chart from the CBO report shows both the growth of revenues compared to last year and the imbalance between revenues and outlays during the first six months of the fiscal year:<\/p>\n<figure class=\"wp-block-image size-full\"><\/figure>\n<p>The biggest reason spending grew faster than revenues? The explosion in net interest costs on our accumulated debt. Net interest rose a whopping 43 percent compared to the comparable period last year, to $440 billion. The combination of debt from the Covid spending binge, and higher interest rates to combat the inflation <a href=\"https:\/\/thefederalist.com\/2024\/02\/14\/democrats-scramble-to-fix-consequences-of-their-spending-because-its-election-year\/\" target=\"_blank\" rel=\"noreferrer noopener\">all this spending caused<\/a>, led Washington to spend more on interest costs in the first six months of the fiscal year than it did to fund Medicare benefits for seniors \u2014 and no, that\u2019s not a typo.<\/p>\n<div class=\"fdrlst__b89e9-6614c203a3a236a8f8b5541bd6322d1b fdrlst__b89e9-paragraph-6\" id=\"fdrlst__b89e9-6614c203a3a236a8f8b5541bd6322d1b\"><\/div>\n<h2 class=\"wp-block-heading\"><strong>And Bigger Deficits to Come<\/strong><\/h2>\n<p>As bad as the current budget situation seems, it pales in comparison to the future woes our country faces. A CBO <a href=\"https:\/\/www.cbo.gov\/system\/files\/2024-03\/59711-Long-Term-Outlook-2024.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">report<\/a> released just before Easter analyzed the outlook over the next three decades and provided a forecast of a country that could become paralyzed by the economic and fiscal costs of servicing its debt.<\/p>\n<p>The first sentence of the first chapter spells the tale: \u201cIn CBO\u2019s projections, deficits are historically large.\u201d The deficits occur on two levels. First, the nation runs historically large primary deficits \u2014 that is, spending exceeds revenues even after excluding interest costs. CBO also notes that these deficits \u201care especially large given the <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/sen-tim-scott-launches-2022-senate-reelection-bid\/\" title=\"Sen. Tim Scott Launches 2022 Senate Reelection Bid\">low unemployment rates<\/a> that the agency is forecasting,\u201d just as Washington ran a <a href=\"https:\/\/thefederalist.com\/2023\/10\/26\/with-a-2t-deficit-this-year-washingtons-fiscal-failure-is-worse-than-you-think\/\">$2 trillion deficit<\/a> last fiscal year when unemployment remained low.<\/p>\n<p>Second, interest costs themselves double (even compared to the higher levels of the past several months) due to the combination of higher interest rates and more cumulative debt. That\u2019s a nice way of saying that future generations will spend many decades paying for the choices our big-spending politicians have made in recent years.<\/p>\n<p>Even the dire scenario laid out by CBO in many respects rests on favorable assumptions. For starters, the budget office presumes that one of the <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/democrats-block-bills-prohibiting-tax-increases-until-unemployment-rate-inflation-return-to-pre-pandemic-levels\/\" title=\"Democrats Block Bills Prohibiting Tax Increases Until Unemployment Rate, Inflation Return To Pre-Pandemic Levels\">largest tax increases<\/a> in history takes effect when major provisions of the Tax Cuts and Jobs Act expire at the end of next year, which will drive revenue as a percentage of GDP toward its all-time high.<\/p>\n<div class=\"fdrlst__b89e9-c8293db12411c6ed963b50a0e10baf4e fdrlst__b89e9-paragraph-10\" id=\"fdrlst__b89e9-c8293db12411c6ed963b50a0e10baf4e\"><\/div>\n<p>In addition, CBO assumed that the spending caps enacted as part of last spring\u2019s <a href=\"https:\/\/thefederalist.com\/2023\/05\/31\/mccarthys-debt-limit-deal-virtually-guarantees-another-omnibus-train-wreck\/\" target=\"_blank\" rel=\"noreferrer noopener\">debt limit agreement<\/a> would continue and keep discretionary spending lower well into the future. Under statute and convention, the Congressional Budget Office has to assume that current law policies continue into the future, but if you think Congress won\u2019t <a href=\"https:\/\/thefederalist.com\/2024\/02\/28\/bait-and-switch-health-care-package-illustrates-washingtons-addiction-to-spending\/\" target=\"_blank\" rel=\"noreferrer noopener\">go on another spending binge<\/a> the second it has the chance, I\u2019ve got some land I want to sell you.<\/p>\n<h2 class=\"wp-block-heading\"><strong>Need for Spending Restraint<\/strong><\/h2>\n<p>The CBO report on the long-term fiscal outlook explains just some of the ways our nation will suffer for its poor financial choices. Policymakers will have less room to respond during an economic crisis \u2014 and for that matter, could find themselves restrained financially to counter an attack by a foreign power or terrorist group.<\/p>\n<p>The growth of our nation\u2019s debt will also mean less growth for the economy as a whole. As government borrowing increases, private lending \u2014 one of the ways businesses can grow and invest \u2014 will decrease. In addition, the higher taxes necessary to service all this debt will weigh on the nation\u2019s economic potential.<\/p>\n<p>To prevent this \u201c<a href=\"https:\/\/www.wsj.com\/articles\/the-silent-price-youll-pay-for-our-mounting-national-debt-federal-reserve-powell-doom-loop-interest-healthcare-11664484369\">doom loop<\/a>\u201d from occurring, Congress needs to put the nation\u2019s budget on a diet \u2014 and the sooner the better. If they do not, Americans may wake up one day to discover just how badly their political class has mortgaged the entire nation\u2019s future.<\/p>\n<div class=\"fdrlst__b89e9-4b28d671dd73b60224dd03c8fa0e5191 fdrlst__b89e9-after-post-content\" id=\"fdrlst__b89e9-4b28d671dd73b60224dd03c8fa0e5191\"><\/div>\n<hr class=\"wp-block-separator\">    \t\t\t\t\t   \t\t\t\t\t\t\t\t\t<\/div>\n<p><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Economists expressed surprise as inflation stayed above estimates for the third consecutive month, leading to expectations of prolonged high interest rates. The Congressional Budget Office (CBO) reports shed light on the economy&#8217;s dilemma. Short-term challenges persist due to significant and enduring deficits stemming from Washington&#8217;s actions<\/p>\n","protected":false},"author":521,"featured_media":2224917,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"https:\/\/thefederalist.com\/wp-content\/uploads\/2024\/04\/pexels-kampus-8475145.jpeg","fifu_image_alt":"","footnotes":""},"categories":[546],"tags":[],"class_list":["post-2224916","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-the-federalist"],"fifu_image_url":"https:\/\/thefederalist.com\/wp-content\/uploads\/2024\/04\/pexels-kampus-8475145.jpeg","_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/2224916","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/521"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=2224916"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/2224916\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/2224917"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=2224916"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=2224916"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=2224916"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}