What solutions have been offered to fix unsustainable budget deficits? None.
At the third Republican presidential debate on November 8th, U.S. voters will likely hear a deluge of insults, interruptions, canned jokes and empty talking points.
They will not likely hear any coherent solution to the soaring budget deficits that are driving Washington towards a fiscal crisis.
The federal government recently revealed that the budget deficit for 2023 doubled to a staggering $2 trillion (adjusted for the cancelled student loan bailout). At 7.7% of GDP, 2023 marked the largest budget deficit in American history outside of temporary emergencies such as wars, recessions, and pandemics. These deficits are projected to surpass $3 trillion within a decade and continue growing thereafter.
These surging U.S. budget deficits have already contributed to rising inflation and a tripling of interest rates. The combination of rising debt and interest rates has quickly doubled Washington’s interest costs to $659 billion. Within a decade, interest costs on the national debt could approach $2 trillion annually, consuming 30% of all federal taxes.
The long-term picture is even more dire. The Congressional Budget Office projects that over the next three decades, Social Security and Medicare will run a staggering shortfall of $116 trillion, driving the national debt to nearly twice the size of the economy. All that borrowing will make interest the largest federal expenditure, consuming the majority of taxes. The debt is so unsustainable that, when economists at the University of Pennsylvania tried to model the long-term economy under these baseline-projected budget deficits, their model crashed.
Continue reading the entire piece here at MarketWatch (paywall)
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Brian M. Riedl is a senior fellow at the Manhattan Institute. Follow him on Twitter here.
Photo by Douglas Rissing/iStock
