The federal budget deficit in 2025 will reach $1.9 trillion, according to figures released earlier this month by the Congressional Budget Office. Additionally, federal debt will reach 118 percent of GDP in 2035, according to the CBO’s forecast.
“In CBO’s projections, the federal budget deficit in fiscal year 2025 is $1.9 trillion,” the CBO’s projection says. “Adjusted to exclude the effects of shifts in the timing of certain payments, the deficit grows to $2.7 trillion by 2035. It amounts to 6.2 percent of gross domestic product (GDP) in 2025 and drops to 5.2 percent by 2027 as revenues increase faster than outlays. In later years, outlays increase faster than revenues, on average. In 2035, the adjusted deficit equals 6.1 percent of GDP—significantly more than the 3.8 percent that deficits have averaged over the past 50 years.”
Massive U.S. Debt: How is That Possible?
You may be wondering how the federal government can take on such a deficit. According to the Treasury Department’s own Fiscal Data page, the government “borrows money by selling Treasury bonds, bills, and other securities. The national debt is the accumulation of this borrowing along with associated interest owed to the investors who purchased these securities.”
The federal government is allowed to do this, while state governments are not; nearly every U.S. state is obligated to have a balanced budget every year.
Who’s to Blame?
During times when the deficit is a major issue in politics, the two parties tend to blame the other.
Ever since the Clinton Administration in the 1990s, when massive economic growth led to the largest surplus in history — as well as claims in September of 2000 that the government was “on track to pay off the entire debt by 2012,” every presidential administration has left behind a higher national debt than the one they inherited.
That’s because every president passed significant measures that added to the deficit. George W. Bush cut taxes and launched two long-lasting wars. Barack Obama presided over the effects of the recession that began shortly before his election. Donald Trump also passed a big tax cut in his first term, while both Trump and Joe Biden passed massive COVID relief packages. Biden touted deficit reduction, especially in the second half of his term, but that was largely due to those COVID-19 spending expenditures expiring.
What Will Donald Trump Do?
In his confirmation hearing, Trump’s second-term Treasury Secretary, Scott Bessent, said that he plans to slash the deficit to the level of where it was in 2015, which was Barack Obama’s seventh year as president. That was also the last time the deficit was under 3 percent of GDP, which Bessent listed as a goal.
“Bessent has criticized Biden for running large deficits and financing them inefficiently, but he’ll soon discover there’s no easy way to do it better,” a Yahoo Finance analysis said. “Deficits aren’t rising inexorably because one president or another pads the budget with extravagant goodies. They’re rising because of spending growth in federal programs that are on autopilot and distribute money to everybody with a legitimate claim.”
But What About Trump’s Tax Cuts?
Donald Trump is planning to pass tax cuts, or at least extend his first-term tax cuts that are set to expire this year. But doing that in a way that doesn’t grow the deficit will be tough, even beyond the question of getting the legislation through with a slim House majority.
This could force Trump into some hard choices.
“This thing cannot be deficit neutral,” Rep. Ralph Norman said recently, according to Reuters, adding that Trump’s fiscal package must cut the deficit “to the tune of a big number.” Others in Congress, however, have the tax cuts themselves — and especially a lifting of the SALT cap — as a bigger priority.
About the Author: Stephen Silver
Stephen Silver is an award-winning journalist, essayist and film critic, and contributor to the Philadelphia Inquirer, the Jewish Telegraphic Agency, Broad Street Review and Splice Today. The co-founder of the Philadelphia Film Critics Circle, Stephen lives in suburban Philadelphia with his wife and two sons. For over a decade, Stephen has authored thousands of articles that focus on politics, technology, and the economy. Follow him on X (formerly Twitter) at @StephenSilver, and subscribe to his Substack newsletter.
