Understanding the Federal Debt Under President Biden: Myths Debunked and Realities Revealed

The ongoing discussion surrounding the federal debt under President Biden often involves misinformation and misunderstandings. Critics argue that the situation is dire and worsening, while others see a positive outlook driven by economic investments. In this article, we aim to provide clarity and debunk common myths about the federal debt under Biden's leadership.

The Interest Burden Argument

One of the most prominent concerns about the federal debt relates to interest payments. Some argue that the interest payments are a huge burden, especially when compared to other economic measures. For instance, a statement might go: "No, it’s better. The interest payments for this year alone cost more than it would take to buy every bit of real estate in Wisconsin."

This argument can be misleading. While interest payments are indeed significant, it is crucial to understand the broader economic context. Real estate values fluctuate, and purchasing the entire state's real estate would be an extreme and inaccurate comparison. Moreover, interest payments are a necessary expense of borrowing, and they are not unique to the federal government. Even personal loans and business loans require interest payments, which are managed within individual budgets.

The Long-term Economic Benefits of Investment

A more nuanced view is that the money Biden is investing in the country will result in long-term higher tax revenues. This perspective challenges the notion that current deficits are perpetually self-feeding. For example, someone might argue: "No, it’s actually better. The money Biden is investing in the country will result in long term higher tax revenues which will go toward reducing the deficit and ultimately the debt."

This argument is rooted in the idea of economic multiplier effects. Investments in infrastructure, education, and healthcare can stimulate economic growth, leading to higher economic productivity and, consequently, higher tax revenues in the long term. Therefore, while the current deficit may be high, the future economic benefits could outweigh the costs.

The Political and Economic Context

Historical context is also essential. The comparison to former President Richard Nixon's tenure can be both amusing and irrelevant. A statement might include: "No, it looks like a crater, how much worse can Sleepy the ice cream POTUS actually sink? Richard Nixon is dancing in hell over sleepy taking over his position!!"

While this statement highlights a political narrative, it does not contribute to a factual understanding of the current economic situation. It is important to evaluate the current policies against realistic benchmarks rather than historical anecdotes. The challenges facing the Biden administration are largely due to ongoing global economic conditions, structural changes in the economy, and the need to address issues like climate change and social inequality.

The Debt is a Collective Issue

The last point to consider is the sustainability of the national debt. Critics often claim that future generations will be responsible for paying off the debt. However, the reality is more complex: "What is this obsession with the federal debt? It will never be paid off. It is mostly bonds owed to bond purchasers and future bond purchasers will pay off the mature bonds when they mature. Your grandchildren will not have to pay it off. That is pure folly."

This statement accurately captures the fact that the national debt is a collective responsibility. Current bondholders are not required to pay off the full debt but rather receive interest payments and the eventual repayment of principal when the bond matures. Moreover, the federal government can continue to issue new debt to finance future investments.

Conclusion

While the federal debt under President Biden is a significant issue, it is important to evaluate it within the broader context of economic policies and future prospects. The arguments against the debt often miss the long-term benefits of investments and the sustainability of the national debt. By understanding the complex dynamics at play, we can make more informed decisions about the nation's future economic direction.