Expect the National Debt to Double Under Biden and Harris Posted by Brian Ford on February 10, 2021
The pandemic has led to many changes in the United States, including a new presidency. Under Biden and Harris, US citizens can expect the national debt to double, inflation to rise, and economic problems to continue.
The Democrats tend to prefer throwing money at problems instead of finding lasting solutions. Free government handouts come with a wide range of drawbacks, including increased debt. Here is how that could impact your retirement plans.
Why Will the National Debt likely Double Under Biden & Harris?
Some of the reasons why the national debt may double under Biden’s presidency include:
- Stimulus packages
- Increased minimum wage
- Job losses
- Shrinking economy
Biden plans on trying to boost the economy by handing out more money, which is a common strategy of the democrats. When Obama took office in 2008, the national debt stood at $9.9 trillion. Just two years later, it had skyrocketed to $13.7 trillion. The increased debt was due to the financial crisis and subsequent bailouts for the auto industry and banks.
The national debt now stands at over $27 trillion. The latest stimulus proposal has a price tag of $1.9 trillion. Experts estimate that the debt will soon exceed the country’s gross domestic product (GDP).
Biden is also on board with the idea of increasing the federal minimum wage from $7.25 to $15 per hour. More than doubling the minimum wage could result in major job losses, limiting revenue collected for payroll taxes.
These problems add to the existing economic issues that the country is facing. The economy may shrink as much as 5% by the end of the first quarter of 2021. With a smaller economy, the gross domestic product (GDP) of the United States decreases, which makes it more difficult to pay down the national debt.
In 2007, toward the end of George W. Bush’s second term, the national debt was just 35% of the GDP. By the end of 2021, economists expect the federal debt to match the GDP. In the coming years, the debt may exceed the nation’s output, which may dramatically increase inflation.
What Are the Risks of Higher National Debt?
Along with inflation, excessive government spending can lead to a wide range of economic issues that make it difficult for the average American to save for retirement. The biggest concerns related to growing federal debt include:
- Lower national savings
- Higher interest rates
- Limited resources for major crises
- Increased risk of a financial crisis
The government saves, spends, and invests less when taking on more debt. The nation has fewer savings available for investing in private ventures to propel the economy.
More national debt also leads to higher interest rates and tax hikes. The government needs to collect more taxes from citizens to cover its spending.
With less income from taxes, the government has limited resources for responding to a major crisis. Natural disasters and financial crises become more difficult to manage.
These issues also make a major financial crisis more likely. Instead of helping the economy, spending money may drive the economy further into a downward spiral.
How Can You Protect Your Retirement Account?
A diversified portfolio is traditionally considered the safest way to ride out economic uncertainty. However, many analysts believe that we are in the middle of a major global recession. Almost every industry is likely to experience setbacks.
One area that is less likely to be impacted by Biden’s agendas is precious metals. US policies have less of an impact on gold and silver, as they are accepted and traded worldwide.
The bottom line is that the national debt may continue to skyrocket. If you want to protect your retirement, start thinking about a gold rollover as alternatives to standard IRAs and 401(k)s.
Recommended Reading For You: The 19 Essential Gold IRA Rollover Facts You Need to Know Before You Invest