Biden’s Proposed $6 Trillion Budget Could Bode Well for Gold and Silver

One thing’s for sure: President Biden seems in no way shy about spending money. There had been whispers in the days, weeks and even months leading up to his assumption of the presidency that Biden would go on a big-time spending spree on behalf of his ambitious agenda. Some suspected he was making all sorts of noise about spending massive sums during the campaign in order to woo those on the progressive left, but that once in office the president would govern as a centrist.

That doesn’t appear to be the case. President Biden seems all too eager to throw fiscal caution to the wind in his assembly of a recently announced budget for fiscal year 2022 that’s the largest in the nation’s history: a jaw-dropping $6 trillion. 

Announced at the outset of Memorial Day weekend, the FY 2022 budget has as components the $2.3 trillion American Jobs Plan as well as the $1.8 trillion American Families Plan, both of which the president unveiled earlier in the year. The Biden budget also includes a proposed $1.5 trillion in discretionary spending. Add to all of that the money that has to be spent on mandatory spending programs such as Social Security, Medicare and Medicaid, and you end up at $6 trillion.

But there’s more – much more – to Biden’s spending plan than the proposed budget for 2022. The long term ramifications of his total policy and spending agenda include annual budgets that steadily rise over the next 10 years, deficits that go well into the trillions every year in the coming decade, and a national debt that climbs to a level so high by 2031 that the projected number seems surreal.

The potential implications of massive annual deficits and a soaring national debt on dollar stability could be profound. Accordingly, the implications for gold and silver could be profound, as well. Precious metals have demonstrated the capacity in recent years to thrive at the same time deficit spending has been especially high. And if it’s the case that such spending will no longer be unusual but instead par for the course as President Biden seeks a sort of spending immortality, then it’s reasonable for retirement savers to consider the possibility that a significant and potentially lasting improvement in the precious metals environment is in store.

2022 Is Just the Beginning: Annual Budgets to Soar Even Higher Over the Next Decade 

I noted earlier in this piece that if the president gets everything he’s asking for on behalf of his FY 2022 budget, it will be the largest in history. But what some may not understand is just how big it is in the context of budgets, historically. The budget for FY 2021 is $4.8 trillion – and it is the largest in history up to this point. If President Biden’s $6 trillion budget is approved relatively intact, it would be not only the largest annual budget ever, of course, but would represent a 25% increase over this year’s current-record budget.    

But presidential spending agendas such as Biden’s can reverberate for years into the future. In the president’s case, those reverberations include the fact that the size of the annual budgets for the next 10 years will only grow from here. The “final act,” as it were, would be a 2031 budget that totals a breathtaking $8.2 trillion.

As I alluded to toward the beginning of this article, the ramifications of such massive, ongoing annual budgets include the associated ballooning of both deficits and the federal debt. However, President Biden has tried to shift attention away from the anticipated increases in America’s debt load by emphasizing that a portion of the bill will be covered by tax increases – if he gets his way on those, too.

The costs associated with the American Jobs Plan and American Families Plan are supposed to be covered with tax hikes, including the president’s proposed near-100% increase in the capital gains tax on those earning more than $1 million. But even if Biden receives all the tax bumps he wants, the size of his budgets for the next decade ensures the government printing press will stay in overdrive for all that time. And the consequences of all that money-printing for the deficit and federal debt could be seismic.

Biden Spending Plan Demands Annual Budget Deficits in the Trillions Through 2031

According to a careful analysis of the president’s spending plans by the Committee for a Responsible Federal Budget (CRFB), we can expect annual deficits as well as the federal debt to join the budgets in entering a brand new spending era.

Except for rare, exceptional years – such as the pandemic-wracked FY 2021 – annual budget deficits in the U.S. have been measured in billions, not trillions. No longer. Per the Biden spending plan, the smallest annual deficit in the next 10 years will be $1.3 trillion, with the 2031 deficit coming in at $1.6 trillion. The CRFB tells us that budget deficits will total $14.5 trillion through 2031 As a matter of fact, the size of the anticipated annual deficits going forward is such that they each will rank somewhere in the top 13 all-time budget deficits by the time the next 10 years are up.

And you can’t expect to have all those inflated deficits without there being a substantial increase in the federal debt, can you? Surely not. The CRFB informs us that the publicly-held portion of the federal debt will soar by $17 trillion over the next 10 years, rising from its present level of $22 trillion to $39 trillion – an increase of nearly 80%. 

Like Spending and Deficits, Precious Metals Could Also Be on the Cusp of a New Era

Understandably, many retirement savers taking in the ambitious spending plans of the Biden administration may be concerned what all of these anticipated budget deficits mean for dollar stability – particularly in light of the central bank’s desire to keep interest rates as low as possible for as long as possible. Significant levels of deficit spending in an ultra-low interest rate environment suggest the very real possibility of a sizable expansion of the monetary base, which can be conducive to the onset of inflation.