MY TURN: An abundance of zeros: trillions, billions and us
Mitchell
The late economist Herb Stein (father of Ben from "Ferris Bueller’s Day Off") had a saying “If something cannot go on forever, it won’t.” It came to mind as the national news (TV, papers and social media) were filled with discussions of deficits, debt and the current administration’s OBBB (One Big Beautiful Bill) as distinct from the Biden Administration’s BBB (Build Back Better). This was all prior to the Jeffrey Epstein drama. It is overwhelming to contemplate trillions (000,000,000,000) of dollars with an Idaho median household income of about $74,900 in 2023. The federal government has been running deficits (spending more than tax revenues) for all but six years since 1960. (not a D or R issue) The 2009 Great Recession saw a deficit of $1.42 trillion and later with the pandemic it jumped to $3.13 trillion in 2020-stimmies, PPP, other support programs. This year, the deficit is anticipated to be about $1.9 trillion — 6% of GDP in a close to full employment economy. Recent Treasury data shows that between October 2024 and the end of June 2025 spending was $5.35 trillion, and revenues were $4.01 trillion — take in 75 cents and spend a dollar. How do we fill the gap? Borrow-sell bonds, notes and bills in some combination. The national debt stands at about $36 trillion — we hit the debt ceiling in January and changing that was part of the OBBB process, adding $5 trillion to the ceiling.
Where does the spending go? In Fiscal 2024 spending was $6.8 trillion. Social Security, Medicare, Medicaid and other income security was $3.353 trillion, Defense was $850 billion and net Interest was $881 billion. Note interest was higher than defense and is expected to hit $1.2 trillion this year. With higher interest rates and more debt (the annual deficit), more will be spent on interest, which means pressure on other federal spending. Long-term rates rose after the Fed cut short rates last fall reflecting in part inflation fears and deficit worries.
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