Do you know that the American federal government spends more money paying the interest on the federal debt than it spends on defense?  Did you know that last fiscal year over a quarter of federal spending was with borrowed money?  We have a debt problem, and Congress seems unable to even come close to balancing the budget.  Every day we spend $2.6 Billion on interest. That is more than $30,000 per second for just interest.  It has been 24 years since the federal government has had a surplus.

In the last 24 years the federal debt has greatly increased, from $5.8 Trillion to $36.7 Trillion (or now 122% of the GDP).  There are several factors for the increase.   The obvious cause is not enough revenue coming in for the spending, and experts blame that on the aging population and the rising cost of healthcare.  I believe some other factors are the two tax cuts (G.W. Bush and Trump), the Great Recession, and the Pandemic. And I believe Congress has not had the will power to address the deficit, and that is due to we the people wanting lower taxes and still wanting all the benefits. 

Ever since I have been able to vote, I have been concerned with the federal government’s debt.  And I have been saying we need to raise taxes and cut spending. It is an unpopular idea, however the Trump administration is actually raising taxes (tariffs) and cutting spending (DOGE).  Tariffs are an indirect taxation on us, though the Trump administration does not characterize it that way. Unfortunately, by making the former Trump tax cut permanent, the Trump administration is also cutting taxes.  When I said raise taxes and cut spending, I did not have in mind the way the Trump administration is doing it.  

I would have taken more time to cut spending, much like how the Clinton administration did it.  The Clinton administration over a five year time period cut more than 250,000 federal jobs, consolidated more than 800 agencies, and eliminated over 100 programs.  It was much less disruptive than the chainsaw approach of DOGE.   And I would also have let the former Trump tax cut expire, or at least let it expire on those making more than a million dollars, and thus bring in more revenue. And I would use tariffs sparingly.  Note, I believe that making the former Trump tax cut permanent undermines what they are doing and may cancel out the tariffs tax increase.  Yes, cutting taxes does improve the economy and could bring in more tax revenue, but results over the last 50 years show that the net result of cutting taxes is to increase the deficit.

Congress needs to make some hard decisions.  They do not need to balance the budget right away, though that would be a good thing to do.  They do need to significantly reduce the deficit.  The deficit for fiscal year 2024 was $1.83 Trillion.  The federal government spent $6.75 Trillion and collected $4.92 Trillion in revenue.  That meant that the government spent 27% more money than it received.  Over a quarter of federal spending was with borrowed money!  This is shocking!  Yes, this will make those interest payments even higher.  How long can we keep doing this?

According to the Congressional Budget Office, fiscal year 2025 is estimated to have a deficit of $1.9 Trillion and in fiscal year 2035 the deficit estimate is $2.7 Trillion.  We are still digging ourselves into a much deeper fiscal hole.  This is not good.  We need to prioritize reducing the deficit and work towards balancing the budget.  We need to raise taxes and cut spending, and we need to do it in a way that is less disruptive than the current methods.