The cliché holds that a photo is worth a thousand words. But a recent chart from the Congressional Budget Office is worth nearly 2, 000, 000, 000, 000 ( that’s two trillion ) words. It demonstrates the size of the budget shortfalls that Washington continues to run year in, year out.
The chart, which depicts budget deficits for 2023 and the fiscal year that ended on September 30th, follows a similar downward trend in our nation’s fiscal trajectory because lawmakers ‘ unabated desire to spend money we do n’t have threatens our country’s future.
Little Budgetary Improvement
The CBO statement summarizing the administrative situation of the federal government for the just-completed fiscal year is the source of the chart. The CBO calculated the gap for fiscal year 2024 as$ 1.9 trillion, excluding the effects of scheduling shifts, as happens when payments are transferred from one fiscal year to another due to the end of the fiscal year on a weekend.
Although that amount sounds large and difficult to understand, it actually represents a ( very small ) improvement over the fiscal year 2023. The federal government ran a$ 2 trillion deficit in 2023 after the Supreme Court reversed the plan last year after accounting for the effects of student loan “forgiveness” ( the CBO recorded the Biden administration’s proposal as spending over$ 300 billion in fiscal year 2022, and then recorded the same amount as” savings” when the Supreme Court struck down the plan last year ).
But as the dashed red line in the above table demonstrates, the$ 110 billion shift in the federal government’s fiscal status from 2023 to 2024 constitutes little more than a drop in the bucket. Because Washington continues to run large and untenable deficits, this year’s “improvement” simply means the federal government will become bankrupt somewhat less immediately.
Income No the Problem
Income increased drastically as revenues increased, causing the repeatedly big deficit in the previous fiscal year. The Internal Revenue Service delayed dates in some areas, reversing some duty obligations from macroeconomic year 2023 to fiscal time 2024, which the CBO explained, contributed to the increase in gross national income of$ 343 billion, or 9 percent.
But ( after adjusting for timing shifts ) spending grew by 11 percent, or$ 699 billion.
Among the main sources of investing development are the following: Social Security spending rose 8 percent, according to more beneficiaries and a great cost-of-living adjustment— bless you,” Bidenflation“. Medicare spending rose 9 percent, furthermore according to beneficiary development and higher payments to companies. Veterans Affairs spending increased by 12 %, as a result of a provision of the law that Congress passed in 2022 that raised benefits but did n’t cover those new expenses.
Spending on refundable tax credits increased by 16 percentage, mainly as a result of a rise in Obamacare membership, which has become characterized by widespread potential scams. The Federal Reserve‘s interest rate increases that were put in place to sedate” Bidenflation” led to a 34 percent increase in net interest payments. To put this into perspective, our rising debt and higher interest rates mean that online curiosity prices now far exceed the overall cost of the Medicare program. And because of that, anyone who claims they wo n’t” cut” Medicare— which unfortunately includes too many Washington politicians these days— is n’t living in reality.
It does n’t take a Ph. D. in economics to understand that a nation cannot long sustain its fiscal position if it spends more than it takes in ( and where spending continues to grow faster than revenues ).
Time to Cut Spending
Despite the fact that the Tax Cuts and Jobs Act, which most of the time expires at the end of 2025, will be passed by many lawmakers when the next session of Congress convenes in January, many will want to spend even more. In any sane fiscal scenario, Congress would completely eliminate this option, but today’s behavior is not so much sane.
There are plenty of ways for conservative lawmakers to extend the Tax Cuts and Jobs Act, and they can do it permanently. However, there is a catch: they must have fiscal discipline to reduce spending. Instead of seeing low-tax Republicans compete with high-tax Democrats, Americans might see a political movement that is focused on keeping spending low and keeping it there thanks to this option.
Sooner or later, Washington will have to cut spending. The only thing left to consider is whether Congress will do it voluntarily or wait until the country experiences a severe fiscal crisis right now. Every day in which lawmakers fail to act, as the CBO report reminds us, results in our nation losing financial and economic leverage and our adversaries gain an advantage.