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- Deficit reduction in the United States refers to taxation, spending, and economic policy debates and proposals designed to reduce the Federal budget deficit. Government agencies including the Government Accountability Office (GAO), Congressional Budget Office (CBO), the Office of Management and Budget (OMB), and the U.S. Treasury Department have reported that the federal government is facing a series of important long-run financing challenges, mainly driven by an aging population, rising healthcare costs per person, and rising interest payments on the national debt. CBO reported in July 2014 that the continuation of present tax and spending policies for the long-run (into the 2030s) results in a budget trajectory that causes debt to grow faster than GDP, which is "unsustainable." Further, CBO reported that high levels of debt relative to GDP may pose significant risks to economic growth and the ability of lawmakers to respond to crises. These risks can be addressed by higher taxes, reduced spending, or combination of both. The U.S. reported budget surpluses in only four years between 1970-2020, during fiscal years 1998-2001, the last four years budgeted by President Bill Clinton. The Clinton surpluses were due to a combination of a booming economy, higher taxes on the rich implemented in 1993, defense spending restraint, and capital gains tax revenues due to a stock market bubble. CBO estimated in April 2018 that the national debt would increase between $11.6 trillion and $13.6 trillion over the 2018-2027 period. These estimates are significantly higher than the January 2017 estimate of $9.4 trillion or the June 2017 estimate of $10.1 trillion, which represented the initial budget scenarios inherited by President Trump. The difference is driven by the Tax Cuts and Jobs Act and the Bipartisan Budget Act of 2018. These amounts are on top of the $21 trillion national debt as of April 2018. Debt held by the public, a subset of the overall debt, is expected to rise from 77% GDP in 2017 to over 100% GDP by 2028. The 2017 debt to GDP level ranked 43rd highest out of 207 countries. CBO periodically updates an extensive listing of budget deficit reduction options. Economists debate the extent to which deficits and debt present a problem, and the best timing and approach for reducing them. For example, Keynes argued that the time for austerity (deficit reduction through tax increases and spending cuts) was during a booming economy, while increasing the deficit is the right policy prescription during a slump (recession). During the pandemic recession of 2020, several economists argued that deficits and debt reduction were not priorities. CBO estimated that the U.S. will have a post-WW2 record budget deficit of nearly $4 trillion in fiscal year 2020 (17.9% GDP), due to measures to combat the coronavirus pandemic. (en)
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- "Here's how bad our situation really is [as of 2008]: We already have approximately $11 trillion in total liabilities, including public debt. To this amount, you need to add the current unfunded obligations for Social Security benefits, of about $7 trillion. Then add Medicare's unfunded promises – $34 trillion – of which about $26T relates to Medicare parts A &B and about $8 trillion relates to Medicare Part D, the new prescription drug benefit, which some claimed would save money in overall Medicare costs. Add another $1 trillion in miscellaneous items, and you get $53 trillion. Our country would need $53 trillion invested today, which is about $175,000 per person, to deliver on the government's obligations and promises. How of much of this $53 trillion do we have? Zip." (en)
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- Deficit reduction in the United States refers to taxation, spending, and economic policy debates and proposals designed to reduce the Federal budget deficit. Government agencies including the Government Accountability Office (GAO), Congressional Budget Office (CBO), the Office of Management and Budget (OMB), and the U.S. Treasury Department have reported that the federal government is facing a series of important long-run financing challenges, mainly driven by an aging population, rising healthcare costs per person, and rising interest payments on the national debt. (en)
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