Reality: The more loans a family takes out and spends, the deeper into debt they become.
Also reality: The more the federal government takes on and spends debt, the more the annual deficits augment and drive the national debt ever higher. Another reality: The U.S. annual deficit is approaching $2 trillion this fiscal year, nearly double the record deficit before the COVID-19 pandemic, as federal debt reaches more than $5 billion a day . Worse still, there is no end in sight.
The Congressional Budget Office reported that the federal deficit reached an estimated $1.8 trillion in fiscal year 2024, $139 billion higher than the previous fiscal year’s deficit. The worrying but hardly surprising news about the deficit comes as the national debt continues to soar, reaching nearly $36 trillion.
So here’s a tricky but necessary question: Does either party really care? I mean, do you care enough to do something about it? I have my doubts. (We’ll get there.)
Maya MacGuineas, president of the Committee for a Responsible Federal Budget, said in a opinion on Tuesday (emphasis mine):
In 2025, lawmakers will face novel hurdles. Not just rising deficits, debt and interest rates, but also the reinstatement of the debt ceiling, the end of the Fiscal Responsibility Act budget caps, and major tax and spending cycles. Within the next 12 years, three major trust funds—for highways, Medicare, and Social Security—will run out of reserves, forcing us to face even more arduous decisions about how to maintain key government priorities.
These hurdles will test and oblige policymakers either balance their desired outcomes with real budget savings or pass the bill on to the next generation.
We cannot afford to continue borrowing at this rate indefinitely. It is long past time for policymakers to stop adding to our growing national debt and instead agree on a path that puts debt on a sustainable downward path for future generations.
But both parties continue to push, as Democrats continue to propose ever-increasing spending while the Republican Party often folds like a inexpensive lawn chair and compromises on increasingly costly legislation.
It’s not about raising taxes. It’s about reducing expenses.
Much to the chagrin of the Democratic Party (as if they cared), that’s not what it’s about Increase in taxes about the evil wealthy and the evil corporations who don’t pay their “fair share,” as the CBO reports clearly shows – it’s about Reducing expenses.
- IIndividual income and payroll taxes combined increased by $343 billion (or 9 percent).
- Amounts withheld from employees’ paychecks increased by $156 billion (or 5 percent), driven by wage and salary increases.
- Unwithheld income and payroll tax payments increased by $111 billion (or 12 percent). This augment includes the impact of behind schedule payments from taxpayers in areas affected by natural disasters, for which the Internal Revenue Service (IRS) has postponed some 2023 filing deadlines beginning in February 2023. Most of these payments were due by November 2023.
- Individual income tax refunds fell by $77 billion (or 21 percent), in part due to the amoratorium on novel claims for the employee retention tax credit, which increased individual income tax refunds in 2023. The IRS announced the moratorium in September 2023.
- Net corporate tax revenue increased by $109 billion (or 26 percent).
As I was writing this article, I was reminded of a salient quote by the behind schedule British Prime Minister Margaret Thatcher.
The problem with socialism is that eventually you run out of other people’s money.
This reality falls on deaf ears in the Democratic Party, while Republicans generally talk tough but ultimately cave in far more than their tough words suggest.
The conclusion
Regardless of whether Donald Trump or Kamala Harris wins in November, the next president will face tough financial decisions — politics aside. While Harris continues to propose raising taxes on corporations and high-income households, Trump talks about imposing novel tariffs, cutting taxes and eliminating fraudulent spending.
Meanwhile, the out-of-control band continues to play.
