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June 23, 2023

Schweikert on U.S. Sovereign Debt Projections: The Wheels Are Falling Off

WASHINGTON, D.C. — Last night, U.S. Representative David Schweikert (AZ-01) delivered a speech on the House Floor to talk about how Americans are poorer today than they were the day President Biden took office over two years ago. Rep. Schweikert also pointed out that workers and savers are hurt most by historic inflation levels. Additionally, Rep. Schweikert noted that the Congressional Budget Office’s FY23 deficit projections have functionally doubled over the past 12 months and dove into the reasoning behind CBO’s revisions. 

Excerpts from Rep. Schweikert’s floor speech can be found below:


Click here or on the image above to view Rep. Schweikert’s remarks.

On the devastating consequences of historic inflation:

[Beginning at 3:24 mark]
“We have these debates here, and it’s like our friends on the other side won’t admit America is poorer today because of what they did. And now we have to start dealing with the other side of this equation. So think of this, because of inflation, America’s poorer. And something that is really hard for many people to process in their head [is] you do realize you and I have lived through probably the largest tax hike in modern history over the last two years. What do you think inflation does? Remember your high school economics class? Who does inflation help? Borrowers. Who’s the biggest borrower in the world? The United States. But who does it hurt? Workers and savers. So if you’re that saver, you’ve been saving for your retirement, [for] your kid’s education, or you’re out there busting your backside, the fact of the matter is, inflation devalued that savings. Who benefited? Who got that value? The borrowers. Who’s the biggest borrower in the world? We are, this government. You’ve been taxed and that wealth was transferred to basically we will pay down the future debt now with inflated dollars. And if we don’t take on the U.S. sovereign debt, that’s how you do it. It’s not a crash. This isn’t new. This has happened for hundreds and thousands of years. Governments spend and spend and borrow, borrow, borrow. And then when it’s time to pay it back, you just inflate the currency. Just turn on the printing presses.”

On CBO’s FY23 deficit projections functionally doubling over the course of a year:

[Beginning at 5:18 mark]
“You do realize the wheels are falling off? So May 2022, functionally a year ago, the 2023 budget, which is what we’re all in right now, we were supposed to borrow about $980 billion. That’s a year ago was the math. Today we’re closing in on $1.8 trillion. We functionally doubled the projected borrowing for this fiscal year over the last 12 months. What’s gone wrong? CBO is often not 100% perfect, but they rarely, rarely, rarely miss a number by 100%. What happened? Well, a handful of things happened. Health care costs have skyrocketed. I was here a couple of weeks ago, and I was showing a chart that basically said just Medicare costs were up 16% in the first seven months. A couple inputs on that. Delayed surgeries, procedures in medical inflation 2-2.5 times depending on your market. Financing costs of the debt. You’ve got to understand, it is not just the $1.8 trillion. Okay. That’s going to be newly issued debt. But what about the several trillion dollars of debt this fiscal year that had to be refinanced? People forget that.

“So, you get the higher interest rate on the new debt and then, I don’t know the exact number, let’s pretend it’s $7 trillion of bonds, instruments, other things that come due that have to be refinanced at the higher interest rate. We know in the first seven months, so two months ago, we had already spent well over an additional $100 billion in interest, meaning by the end of the fiscal year, you’re probably another quarter-trillion in financing costs. The third thing that’s happened is some of the tax receipts have fallen fairly dramatically. One of the numbers from a month ago was tax receipts were down about 10%. A lot of that was capital gains taxes because are you going to go sell the thing you have a gain on, whether it be your house, the building, your stock, whatever it is, where you’d be paying capital gains, if most of that gain is inflation? So you’re going to go sell this and buy something over here to replace it. But if most of this is inflation, you’re going to pay a bunch of tax on inflation, and then you go buy another asset that’s also been inflated because of inflation. People do the economically logical thing. They don’t sell, and we don’t have incentives in our tax code right now to have that velocity in the economy. So you got the triple whammy, and that’s how you functionally go from $980 billion projected for this fiscal year to $1.8 trillion.”

On what U.S. sovereign debt will look like in 20 years if the federal government doesn’t change its dangerous spending trajectory:

[Beginning at 24:00 mark]
“There’s things going on around us that are miracles. How do I get this place to be optimistic? Our debt is a disaster. It is going to basically crush this society. I have an 11-month-old little boy at home. I have a seven-and-a-half year old little girl at home. And now it’s 23 years, according to CBO, [from now] we have to double their taxes. We have to double every business’s taxes. We have to double every import fee and tariff and everything in government. We have to double receipts just to maintain baseline [services]. We basically are heading to the moment where we’re passing the inflection [point]. There will be so much debt, and with the higher interest rates now being projected, it is a death spiral. Stabilize, lower as much spending as you can, and adopt the technologies. Chase them as hard and fast as you can.”

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