The federal government faced a $1.8 trillion budget deficit in the fiscal year ending on September 30, despite an increase in tax revenue, primarily due to higher spending and escalating interest costs associated with the $35.6 trillion national debt.
The only positive aspect of the Congressional Budget Office’s latest revenue report is that the deficit did not worsen significantly in the previous fiscal year, rising by only $139 billion compared to the year before.
This indicates a spending problem within the federal government, with spending reaching $6.75 trillion last year, fueled by a borrowing issue. Interest payments on the national debt surged by 34% to $950 billion, reflecting the substantial national debt size, now equivalent to the nation’s annual economic output for the first time since World War II, and escalating interest rates.
Although interest rates may decrease, CBO projections suggest that the cost of servicing the national debt will continue to rise in the future, with estimates indicating that interest payments could surpass $1.6 trillion by 2034.
Rising debt levels lead to decreased economic growth and challenging decisions on government spending priorities after meeting interest obligations. However, this crucial issue has been largely absent from the current presidential campaign.
Vice President Kamala Harris and former President Donald Trump have proposed policies that would further increase the deficit and add to the national debt. Analysis from the Penn Wharton Budget Model suggests that Trump’s proposals could add $5.8 trillion to the deficit over the next decade, while Harris’s plans may lead to an additional $2 trillion deficit, mainly due to increased spending and tax hikes.
According to the Committee for a Responsible Federal Budget (CRFB), Trump’s campaign promises could add around $7.5 trillion to the deficit over the next decade, with Harris potentially adding $3.5 trillion. The lack of serious debate on federal spending during this election is a missed opportunity for the country.
Americans are increasingly burdened with funding the government, yet tax revenue remains insufficient to meet the growing expenditure demands. It is essential to address how the federal government should fund its spending in a sustainable manner.
