More news of the federal government's finances, courtesy of the Congressional Budget Office, shows that the costs of all that profligate spending are really starting to bite.
The headline numbers look like this:
The deficit totals $1.6 trillion in fiscal year 2024, grows to $1.8 trillion in 2025, and then returns to $1.6 trillion by 2027. Thereafter, deficits steadily mount, reaching $2.6 trillion in 2034. Measured in relation to gross domestic product (GDP), the deficit amounts to 5.6 percent in 2024, grows to 6.1 percent in 2025, and then shrinks to 5.2 percent in 2027 and 2028. After 2028, deficits climb as a percentage of GDP, returning to 6.1 percent in 2034. Since the Great Depression, deficits have exceeded that level only during and shortly after World War II, the 2007–2009 financial crisis, and the coronaÂvirus pandemic.
That's extraordinary considering we currently have a growing economy. What could possibly account for all of this red ink?
One big factor is interest payments on the pile of debt Uncle Sam has accumulated over many, many decades.
And both major political parties added to with unrestricted fervor during the COVID-19 years of the late Trump and early Biden administrations.
Those payments now are bigger than the defense budget. And it's happened much sooner than predicted. As Avik Roy writes in Forbes:
…just one year ago, the Congressional budget scorekeepers estimated that interest payments would exceed defense spending in late 2028. By 2029, the CBO then projected, we'd be spending $1,041 billion on defense and $1,071 billion on interest.
Now that threshold will be crossed this year. In 2024, CBO estimates the federal government will spend $850 billion on defense, compared to $870 billion on interest. Under the CBO's new estimates, 2029 defense spending will be significantly less than previously projected ($954 billion) while interest payments will be higher than previously projected ($1,170 billion).
And if that isn't stomach-churning enough, there's the headline number to end headlines:
Under the CBO's still-rosy predictions of future interest rates, in 2034 the federal debt will rise to $54 trillion (from $34 trillion today).
What's genuinely troubling about this – outside the magnitude of the numbers, and that debt financing will eventually become a bigger line item than anything else in the federal budget is that the political class refuses to consider meaningful ways to curb spending.
And that means addressing entitlements. No way around it. Unless you happen to be a presidential candidate of either major party. In which case, the mere mention of reforming entitlements is spun as an attack on grandma.
Here's the thing: grandma will get everything she's been promised. And a lot more. Her grandchildren? They will get stuck with the bills.
The opinions expressed in this article are those of the author and do not necessarily reflect the positions of American Liberty News.
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