The US Federal Budget

If there’s a cliffhanger in economic American life, it’s the US Federal Budget. 

To date, we’ve managed to accumulate a debt of $33.7 trillion, due in part to Reagan’s tax cuts in the 80s, the Afghanistan and Iraq war and the 2008 financial crisis under Bush, the Covid-19 subsidies, Trump’s tax cuts and the recent Biden’s infrastructure and green policies. 

At the same time, the Republican party has demonized taxes, gutted the IRS and promised that they would be budget hawks while just acting the opposite way. 

With a budget deficit under $2 trillion last year, we are guaranteed to do even worse next year as interest rates to finance our huge debt reach staggering amounts. They were $749 billion last year, which gets them almost at par with our $782 billion defense budget and in the current year, they’ll be on track to surpass $800 billion, more than double their 2021's $352 billion figure.

Faced with this catastrophic outlook our Congress remains unmoved. The Republicans say “Cut the spending” while their Democrat counterparts suggest “Raise the taxes”. 

Both the truth and the remedy, obviously lie somewhere in between these two assertions, but the more we wait, the more painful tightening our belts will become. This will hurt really, really, badly!