If you plan to rely on Social Security in retirement, President Joe Biden’s spending plan should terrify you.
In his first 100 days in office, Biden has proposed more than $7 trillion in spending. There was $1.9 trillion for the coronavirus. His infrastructure proposal, which features very little infrastructure, would cost $2.3 trillion. The “family”-focused spending plan he unveiled Wednesday would cost $1.8 trillion. His budget request for discretionary spending is $1.5 trillion.
That’s before you get to Social Security, Medicare and Medicaid. Mandatory spending, which includes those programs, was around $3 trillion during the past fiscal year.
That puts Biden’s total spending list at around $10.5 trillion. In 2020, federal revenue was $3.4 trillion. Biden has proposed a series of new taxes, but nowhere near $7 trillion worth.
If passed, his plans will further increase the national debt, which currently sits at a staggering $28.2 trillion.
Since no one can comprehend a number that large, here is some perspective. The debt is $85,400 per U.S. citizen. The debt to GDP ratio is around 130 percent. For comparison, after World War II, the ratio was 118 percent.
The debt is growing more rapidly now, too. When Barack Obama became president, the federal debt was $10.6 trillion. When he left, it was $19.9 trillion. When Donald Trump left office, the debt exceeded $27 trillion. Excess spending has been a bipartisan problem, even if the pandemic drove some of increase under Trump.
In 2020, interest on the debt cost $345 billion. The Congressional Budget Office projects that interest costs will decline over the next few years because the Federal Reserve is keeping interest rates low.
Some argue this means it’s the perfect time to spend money. Lock in those low rates, they say, like someone refinancing their home. The difference is that when homeowners make mortgage payments, they’re also paying down principal. There’s an end in sight.
But Biden would add any unpaid-for new spending on top of existing debt. At some point, the government will have to refinance the debt it takes out now at higher interest rates. Not great when there’s more debt to service.
Some politicians act as if this level of deficit spending can continue indefinitely. This is akin to thinking in 2006 that housing prices would always continue to head north. Rising prices — or in this case rising debt — is creating a bigger problem in the future.
This leads back to Social Security. In 2020, defense spending was $690 billion. That’s a lot of money. But spending on Social Security and Medicare was $2.1 trillion.
When the spending cuts come — and the math is unavoidable, even if it’s taking a while — they’re going to hit entitlement programs. That’s where the spending is.
It doesn’t matter that you paid Social Security and Medicare taxes for your entire career. Your money is gone. It’s a Ponzi scheme only Bernie Madoff could admire.
Every dollar Biden spends on pork projects now is one dollar plus interest that won’t be available for future Social Security payments.