Tom Kando
There is much to worry about. The wars in the Middle East and in Ukraine, Trump’s possible re-election, hurricanes in Florida, etc. One thing I often worry about is America’s out-of-control federal deficit.
On that issue, both of our parties and both of our presidential candidates are likely to continue to do the wrong thing. They are likely to continue to grow the deficit.
Obviously, I will vote for Kamala Harris. Trump and a Republican government would probably increase the federal deficit much more than a Democratic administration would. The past clearly shows this. Trump’s tax cuts (primarily for the super rich) added astronomical all-time records to the deficit. Generally, Republicans increase the national deficit more than Democrats. Republicans are driving the country toward bankruptcy more than Democrats, even though both parties contribute to this, and even though Democrats are supposed to be the ones who want to spend as much as possible on social programs.
The last time that the federal budget was in the black was during the Clinton administration, from 1998 to 2001.
I looked at the last ninety-six budgetary years from 1931 through 2025: During this period, the White House was occupied by a Democrat for a total of fifty-two years, and by a Republican for forty-four years. During this period, the federal budget was in the red for a total of eighty-three years, and in the black for a total of thirteen years. Nine of these thirteen “solvent” years were achieved by Democratic presidents and four by Republican presidents. Of the eighty-three “red” years, forty-three years were under democratic presidents and forty under Republicans. QED.
Of course, federal spending is determined by a host of factors. Most noteworthy are wars, economic depressions and tax cuts. For example, Hoover and Roosevelt together accumulated sixteen consecutive deficit years. These were necessary because of the Great Depression and World War Two (1929-1946). Truman presided over four deficit years during the Korean War (1950-1954). Johnson and Nixon together had eleven deficit years caused to some extent by the Vietnam War (1965-1975). Reagan’s eight years were all deficit years due in part to his tax cuts (1982-1989). George W. Bush presided over eight deficit years caused in part by our wars in Iraq and Afghanistan (2002-2009). Obama’s presidency also consisted of eight deficit years, largely triggered by the Great Recession (2007-2009). The deficit champion was President Trump (2018-2021), whose deficits were caused by his tax cuts for the super rich, and amounted to a total of $8.561 trillion over four years, with $3.669 trillion for 2021 alone! (Federal Budget Receipts and Outlays)
Depending on the calculation, the accumulated federal deficit is now at $25.54 trillion or $35.26 trillion. Either way, it is now either nearly equal to or exceeds the totality of our national annual GDP.
The federal budget was $6.13 trillion in 2022. It was $6.2 trillion in 2023, when the government collected $4.5 trillion and thus ran a deficit of 1.7 trillion.
In 2022, the government had to spend $476 billion to finance its debt - in other words, interest payments. In 2023, it spent $658 billion to finance its debt.
Imagine: in 2023, the government spent (= WASTED) nearly 11% of its money on interest payments! Imagine how many fine things the government could pay for, with an extra $658 billion each year!
This is what happens to anyone with debt. If you don’t pay off your credit card debt every month, you grow your debt and you run the risk of spending more and more of your money on financing what you owe, rather than buying groceries and whatever else you need. A vicious cycle sets in. That’s what the government has been doing for decades.
The only way out of this is to (1) cut spending and (2) raise revenue. Cutting spending is becoming more and more difficult.
Biden and Harris have been honest about the need to raise taxes. They have both spoken of an annual income threshold of $400,000, below which no one would see any tax increase. Fine. Maybe this would increase federal revenue sufficiently to balance the budget. I am not an economist, and I don’t know how much could be raised in this manner.
Without raising revenue, the government is less and less able to do what it’s supposed to do - medicare, social security, other services, protect the country militarily, etc. The government’s annual interest payment is already approaching One Trillion dollars. It will soon exceed the total size of our military budget.
Raising taxes need not be permanent. It can be temporary, until the debt is reduced and the out of control cost of financing it is eliminated.
Many people, including the Nobel laureate economist Paul Krugman, tell us not to worry too much about the federal deficit. We are sometimes told that if our economy grows healthily, we’ll somehow grow out of our deficit.
And it is true that comparing the federal government’s finances with a household budgeting does not do justice to the complexity of the former.
There is also the question as to who our government borrows from. In other words, who benefits from our federal deficit? Basically, our government borrows from “the public.” This includes foreign countries such as China, and it also includes many American entities.
There are countries whose governments’ cumulative debt is larger than ours, in proportion to their GDP. They include Japan, France, Italy and several other countries in Europe and elsewhere. But most of the Japanese debt is held by Japanese entities.
Then, too, some people might argue that the interest payments made by the government may be spent in desirable ways, too, so not to worry.
But make no mistake about it: What our federal government pays out in interest cannot be spent on any of the myriads of services for which it has been traditionally responsible. In that sense, our federal government is moving in the direction of bankruptcy.
leave comment here
