A year ago, I wrote about the USA debt.  Back then I noted that 27% of federal spending was on borrowed money for fiscal year 2024. For fiscal year 2025, because of President Trump’s DOGE effort and his tariffs, 25% of federal spending was on borrowed money. (There was a deficit of 1.78 Trillion dollars and spending was 7.01 Trillion dollars.)  That is a slight improvement, but if you had to borrow a dollar for every four dollars you spend you would be in serious financial trouble.  And yet we continue to borrow more and more money.

So far this fiscal year (through June 2026), it is not looking good.   Federal spending is up 3% and deficit spending is up 2% when compared to the same time period last year and right now the 15% of the federal spending goes for interest.  The only category with a larger percentage is Social Security (23%).  Every other category (e.g. medicare, defense) has a smaller percentage than interest.  But that is not the whole story. 19% of all federal spending goes to maintaining the federal debt, so the effect is more than the 15% of interest payments.

We are not making any headway on the federal debt.  In fact, we are digging ourselves deeper and deeper into debt. I predict in just a few years, interest payments will be the largest category of federal spending.  We are and we will be paying for money we already spent in years past.  We have to stop kicking the can down the road.  This is a case of pay now or pay more later.

I have always been concerned about the federal debt.  I first voted in1976 and the debt was 3.54 Trillion dollars in 2025 inflation adjusted dollars.  25 years ago, in 2001, there was the last federal surplus.  The debt then was 10.55 Trillion dollars in 2025 inflation adjusted dollars. At the end of the fiscal year 2025 the debt was 37.64 Trillion dollars.  It has more than tripled in 24 years, and is more than ten times the debt from 1976. 

Some people will argue it is not that bad because the economy is much larger.  There is some truth in that but if we compare the debt to the gross domestic product (GDP) we find disturbing record numbers.  At the end of the fiscal year 2025 the federal debt to GDP was 124%.  Outside of the last 15 years, the only time the ratio was close to that high was in 1946 when the federal debt to GDP was 106%. That was due to all the borrowing during World War II.  And after the war, the post-war economic boom and government surpluses brought down the ratio.  We need those government surpluses to bring the deficit and debt under control.

As I have always said, we need to raise taxes and cut spending.  And we need to be smart about it.  It will hurt a little, but it needs to be done now.  If we wait, it will hurt a lot more when we finally address the deficit.