US federal budget deficit jumps 12% in one year to nearly $2 Trillion
finance.yahoo.com
finance.yahoo.com
Obviously the people behind it were not serious, and did nothing to actually address government waste or reform the welfare system. But the result is the same - the idea of cost cutting as a means of addressing the deficit is effectively dead. There is no dry powder on the "slash budgets" side of the ledger. All that's left is raising taxes. (Or do nothing until there's an actual hyperinflation event).
The DOGE cuts last year were paired with, yes, massive tax cuts for the rich: [0]
[0]: https://www.nbcnews.com/politics/doge/doge-trumps-agenda-cal...
So they DID massively try raising taxes, just on everybody.
Remember when the standard deduction was half of the current value…?
They all backed out when it came to walk the talk.
(Or to cut $1 billion here and there, hundreds of times per annum, which would have needed like a dozen DOGEs and iron discipline in Congress)
The administration successfully passed through some recisissions (the ones that gutted the entire USAID program, CPB, and etc) and passed the OBBBA. To say the "backed out" I think is a bit too generous. They essentially threw out anything that wasn't hard bolted down by the Constitution.
The reality is there is not any real way to achieve significant cuts without entitlement reforms or defense cuts (lol).
Most likely, the bulk of the solution will come through debasement and stealth default. Real inflation plus manipulating the official inflation numbers to default on a part of inflation adjusted obligations like TIPS and social security.
Maybe the trick is to not tell them about your plans until after their vote? That's how this admin got a lot of their projects done after all.
The reality is that he promised so many things to so many people that no matter what he does it can be spun to look calculated.
Regardless, from a realpolitik point of view, it's easier to remind people that are not getting what they wanted and were tricked, rather than try to convince them they were wrong this whole time.
Fact is, people accused of "Trump derangement syndrome" actually predicted his rule. Very accurately. It was visible and clear. It is just that it feels better to pretend it was not clear.
And while the notes above are my observations and thoughts, they are not something outlandish or wrong. Sociologists have also noticed this effect, it even has its own name and studies:
I suspect you’re right though. My fear is that systemic failure will happen too quickly for a reaction to the initial worsening. I worry we’re nearing a precipice where our debt will be unaffordable if our credit gets downgraded a couple decades in the future.
This idea that a social security haircut is necessary to solve deficit issues has been a very successful Overton window shift by the right.
If you want to solve the budget deficit you need to go after the things that matter which is mandatory social spending these days. That and the revenue side combined are all that matter. Even the military is starting to become more and more irrelevant as social spending and debt service eats up all the air in the room. You could end it entirely tomorrow and you’d still have a deficit. It’s not the 1990s anymore.
Anything else can be immediately written off as unserious action brought by unserious people. The bike shedding of budgetary politics.
Bad example, because private jet use (and flying in general) is still relevant and shouldn't be ignored and it is easy to address with the overall solution which is carbon taxes.
If we're talking about cutting waste, why not first cut the military budget which is larger than the next ten countries combined? The same military which can't stop a country whose GDP is smaller than it's budget?
But no, according to Republicans, the problem begins when you spend on people rather than showering money on corporations and billionaires.
Do you think the US federal government spends too much on welfare?
Yes you guts spend too much and get too little from it.
You really want sane governance like under Bill Clinton which was the last time the budget balanced I think.
I know many people in big tech that complain about the administration and drive a Tesla to work. People with plenty of wealth to change cars etc if willing. They enabled DOGE.
Some info - https://usafacts.org/government-spending/
It's not really cost cutting, if the money is simply repurposed to be spent elsewhere. If you close agencies, gut others, but redirect all the money to grift to be pocketed by the ruling family, no cost has been cut.
What happened to DOGE and USAID?
Such dives tend to be fatal.
Until AI can produce a blast-management plan to ensure the hero's survival, the necessary courage shall remain elusive.
Remember to call it SI ("Super Intelligence"), not AI otherwise you make yourself enemy of the United States of America.
There was also the dot-com boom, which of course wouldn't have happened without Al Gore inventing the Internet.
Then Republicans took Congress in 1994 with their "Contract With America". They passed a budget that was much closer to balanced, whether Clinton wanted it or not. Eventually, as you say, that led to a surplus in 2000. (That was the first surplus since Andrew Jackson, by the way.) But Clinton by himself wasn't going to do it. He was going to play pretend. It was the Republican Congress that forced him to.
Now, if you think I'm advocating for the Republicans here, I note that Republicans don't believe in anything like a balanced budget when the president is their guy. I'm just saying that, if you're going to point to Clinton, state the record accurately.
(One detail I don't remember: Why did Clinton's 1993 deficit plan get no Republican votes? Was it because they did not want to cut the deficit? Was it because they just wanted to deny Clinton a victory? Or was it because they wanted to actually do something about the deficit, and Clinton's plan was more pretend than real?)
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> Hard times create strong men. Strong men create good times. Good times create weak men. And, weak men create hard times.
Good times have made weak men. People unwilling to stand up for our values. Afraid to even declare what we stand for. Afraid to be proud of our traditions and what makes our way of life superior and worth defending and fighting for. These weak people will vote for candidates who demoralise us and weaken us and ensure our demise.
The lion doesn't concern itself with the opinion of sheep.
They enshrined a number of rights that are under attack by both ends of the political spectrum.
It's the failure to break the cycle which leads to dictatorship, and is unequivocally not the solution to problems of today.
I was struck yesterday by reading Huey Long's "Share Our Wealth" proposals from the 1930s in the midst of the Great Depression.
https://en.wikipedia.org/wiki/Share_Our_Wealth#Proposed_legi...
One characteristic of democracy is that it is ever-rewritten by those who strive to change it and vote. (Also, occasionally assassination, in Long's case)
https://acoup.blog/2020/01/17/collections-the-fremen-mirage-...
It isn't 2024 any more and you cannot repeat that election campaign.
Under the Trump administration, nothing goes to the voters and everything goes to BigTech, the MIC and Trump's friends.
Sounds like total bullshit. I briefly googled it and apart from AI also telling me that it was total bullshit, the first list I found split the Roman empire in two so it would neatly match the hypothesis!
Someone just thought of that and then found data to fit their neat idea.
> Sounds like total bullshit.
You're right. It more like an avg of 118 years (median 73), not 200, depending on what you mean by "greatest" ofc. The Ancient Romans, US, and Dutch pulling that average up and 1/3 of historically modern continuing democracies having a short lifespan being founded around WW2, pulling it down.
The Roman Empire was not stable for an uninterrupted period of time. It's conceptually called a single state for simplicity, because such a large period of time and area of land naturally had instability (less than current Europe, granted). The Roman Empire democratic government lasted about 487 years before falling into autocratic rule.
Did that mean it was no longer a great civilization?
Also I would argue that a civilization that only lasts 100 years is not great almost by definition. Where's your data?
The question was about the average lifespan of a democracy (or any derivation, like a republic).
This is a variation of talking past the subject. eg https://www.instagram.com/p/DY2DRKDhqaa
Please show me that moment, is it in the room with us right now?
On the contrary, giving money to the public would actually help the economy, but people continuously vote for politicians who are (ostensibly) “careful” with the money.
These are just straight up numbers increasing or decreasing. It’s not complicated shit. Quit equivocating.
2. The vast majority of our spending is not discretionary, anyway. You can’t refinance social security.
3. Democrats held the executive for the past two recession recoveries, and spent accordingly at the advice of new school economists. Which worked both times, BTW.
4. The government’s budget is not like a household budget — a deficit isn’t necessarily a terrible thing. Obviously the current situation is absurd, but we should also avoid simplifying complex matters of state like libertarians do with ethics just to avoid hard conversations.
That is quite beside the point that sovereign debt is considered one of the safest places to store savings and by diminishing the stockpile of debt with a budget in surplus one is diminishing the economy’s ability to save at a low risk level.
So you don’t understand the concept of sovereignty then.
I’m also not entirely sure how relevant that is due to states (and provinces) not printing their own currency though. Very different situations.
“No budget that runs at a deficit is acceptable”
Why not? Deficits can be healthy and safe when they’re managed. Literally most persons, businesses, and governments use debt. It helps manage purchases over time, and it’s an inflationary hedge.
The idea that “any deficit is bad” was literally pushed as propaganda to make you fatalistic about managing the deficit. As said, one party raises it, one party lowers it, and the party that raises it claims that lowering it to anything but zero is “just as bad” as their runaway debt growth. Propaganda.
> Why not?
The household analogy works for some people because it answers a moral question, not an economic one: Why should government be exempt from rules that individuals must follow?
The development of the household budget idea as a way of reasoning about the the federal government's is as old as economics itself. The Greek word for economics is oikonomia, consisting of - oikos = household - nomos = management
This analogy broke 90 years ago in the US, when, in the aftermath of the great depression, Keynes argued that governments should do things that households cannot: borrow during recessions, spend when private demand collapses, tolerate deficits until recovery. And that these have a beneficial effect on the economy and its participants because government spending becomes someone else's income, essentially injecting demand into the economy.
During the 1970s, US politicians realized that the household budget analogy was an effective rhetorical tool for arguing for fiscal conservatism. Its effectiveness bore no relation to its reflection of present reality. What it did reflect was a set of values: thrift, responsibility, independence, and skepticism of debt. But most of all, it speaks to a sense of justice - that the rules for me were also the rules for thee. The difference that the government plays by a different set of economic constraints than I do is the fundamental tension that the household analogy attempts to address. This is a moral intuition not an economic intuition. The sentiment still holds power today despite it being a bad intuition pump for economic reasoning.
It probably greatly depends on what debt is spent. If it's used for investment to spur further growth, it's entirely different if it's used for consumption. Is government using depth for future growth?
The president proposes the entire budget, and can veto the entire budget regardless of which party is in power. Of course Congress has immense influence and you also can't pass a budget they don't agree with. That doesn't change that not only does the president matter (the claim I'm refuting), they are the most important single person that matters, by design.
1. First off: the deficit article were commenting under right now. This is unusual and terrible and 100% due to GOP norm breaking.
2. The BBB raised the debt astronomically, so this will continue well past the end of the war.
3. We’re engaged in a war of choice with a huge country with no end in sight and no stated objective, and the pentagon is getting more money than ever.
4. The corruption and graft is so rank and blatant that it might actually make a dent here, which is absurd. God forbid they carry out their ethnic cleansing plan for Gaza and then we pay for Trump City, there. Not to mention all the subordinate graft.
5. Only one party has divorced itself from reason entirely. Democrats are deeply flawed and I disagree with many of them on many things, but none of them dare try the ‘nuh uh shut up’ approach that is central to the GOP in the days of Trump. Imagine if they said anything as absurd as “Haitians are eating our cats and dogs” or “I’ll give everyone $5k” or “I didn’t lose the election that every single watchdog said I did” — they would be lambasted and forgotten within days.
6. Only one party is planning for the other party to ever be in power ever again. That is, assuming you don’t take Miller’s word for it that there are seven bajillion illegal aliens that the democrats ship in to win elections, which just hasn’t happened to work yet because the GOP is just too popular, and hasn’t been uncovered in any actual investigations because they’re just too darn tricky.
Sorry. Presumably this whole thread will be wiped anyway. But this is not a “both parties” thing! We’ve had a balanced budget and a positive treasury balance in my lifetime, and I’m a baby person!
(People said it was impossible then as well, FWIW.)
I’m convinced that a big part of our political woes come from the fact that major elections are at the end of the year. Obama election, 2008. Great financial crisis, 2008. So who oversaw the big bailouts and massively spiked the deficit dealing with the crisis? Obama, of course. Except it wasn’t, it was Bush.
Likewise, Biden 2020. Pandemic 2020. Who oversaw lockdowns and massive federal payroll loans and big government checks sent out? Biden! (No, Trump.)
you are right in that neither can fix it entirely
only one party consistently raises the debt->deficit
and only one party consistently lowers it
hint: you cannot spend $21 TRILLION on militarizing the country and going to war without exploding the deficit, there's no profit in war, only massive expense
* https://ips-dc.org/report-state-of-insecurity-cost-militariz...
and that $21 Trillion was before the Iran War which is going to go on for years and cost another trillion to replace all the weapons and ships, remember all those bases and planes that were destroyed which this administration is covering up
* There's lots of profit for military contractors and other insiders, which is the entire point!
In my opinion the following graph should be mandatory viewing before any discussion on major tax policy changes in the US.
If you wanted to “fix” the budget deficit, you’d have to collect all the money that the US has printed. At least that’s how I understand MMT.
The country with the worst debt crisis is France. Their tax rate is 40%, they don't have their own currency (It's EUR), they have a large primary deficit and it's politically impossible to cut spending. EU must rescue France in next 4-5 years.
The whole point of debt is that it never gets paid. Not. a. single. country. has ever paid it off (and the few times it did happen, hundreds of thousands died). It keeps rolling forward, and gets eaten by inflation. The vast majority of "first world" countries have a 50%+ debt to GDP ratio (except when you do like Germany and manipulate the eurozone currency to your advantage) and are doing just fine. Countries have debt because people want to lend to them, because it's where things happen. Bhutan doesn't have debt, because it doesn't have the money to build it up.
>EU must rescue France in next 4-5 years.
zzzz
Can the american bots worry about their own country and their deeply ingrained problems before repeating the propaganda you read in the atlantic ? It's getting a bit boring.
AKA: Take on massive loans. Buy assets fast or stick into HSA.
Edit: I don't really need it explained to me, I literally just said I assumed it's satire. Also who would downvote this? Calm down.
(The UK media are similar, but we did manage to get rid of the most disastrous budgetary Prime Minister Liz Truss in a couple of months)
imagine what's going down after two more years of this
Iran War will still be happening at a BILLION dollars a day
gas will still be draining an extra BILLION dollars a day from everyone's pockets
how much healthcare and homes could have been bought with that
Algorithm for surviving "rats on a sinking ship":
1. Watch the program execute
2. Examine behavior patterns
3. Best guess where they point
4. Prepare for that, whatever that is.
5. Error correct and repeat step 1.
ps. If enough rats adopt the algorithm the ship won't sink.
CBO is not told about all the military bases destroyed in the middle-east, it's a secret by this administration, so they cannot expense that
and this is not going to end before February 2029
and there is still a billion dollars EVERY day being taken out of the US economy by excessive gas and diesel prices even for those that don't drive
I aced economics in college but I don't get how we are not in a recession
Everyone is putting gas and groceries on their credit cards now, how does that end?
I hope everyone is enjoying American Yanukovich, and looking forward to Amerimaidan to get rid of him.
* https://www.us-debt-clock.com/presidents
Some mitigating circumstances are COVID in his first term (also effecting Biden), but there's also a lot of 'self-inflicted' damage, especially the last two years.
It turns out tax cuts may not actually pay for themselves (never mind ill-considered military adventures).
1. Republicans start a war and cause a recession
2. Democrats get swept into power, barely.
3. Democrats clean up the mess but key reforms are blocked by some lone asshole like Joe Lieberman.
4. Everyone complains that Democrats didn’t do enough, it’s all the immigrants’ fault, and put Republicans back in power.
5. Return to step 1.
According to anthropologists, we are all still the same barbarians we've ever been.
According to biology, scarcity ( the ultimate downstream effect outcome of money printing in the US since at least 1971 ) promotes aggression and reduced breeding.
According to Confucious, it's good to live in interesting times, unless that was meant as a curse ?
To the point that I wonder if Pence actually saved us all when not doing what he was supposed to - but the people Trump put in place meant he didn't get blocked for running again.
At least the elections look close to uphold the illusion of a democracy.
Of course he campaigned on ending 'forever wars', but to his base, this is all part of some masterful 4D chess move.
2. Prompt Claude for a balanced budget.
...
??? Profit!
It really didn't come up with anything crazy. It was basically cutting spending and raising and creating new taxes. With the plan being to spread the pain based on tolerability and medium to long term sustainability. With actions like a fedral consumption tax with planned rebates depending on household wealth.
Its also tried to be careful around things that might create long term problems like dramatic education cuts and what not.
The reforms it gives are altogether pretty numerically radical but its not radical in the internet way where its a polarized solution. It's not a reddit style eat the rich or a business trickle down wealth solution.
The interesting reforms are the ones that are easy to sell to the general public with a 30 second elevator pitch, or a one paragraph comment online - even if the people that are currently in power might hate the idea.
The fires of those ideas can be stoked, and if enough people get behind them, then those aspiring to greater political power will begin to adopt the ideas as part of their platforms.
"Let's tax advertising!"
It’s a question of inputs and outputs.
Right now we’re moving towards more balanced trade by shipping gold overseas. Nonmonetary gold and metals are our largest export YTD. That’s not going to work forever.
We need to take one on the chin and allow the currency to devalue versus gold, then revalue the gold reserves which haven’t been revalued since 1973. It will result in some short term pain, but it doesn’t have to fall in the usual distribution. (Distribution of financial pain is a policy choice.)
Only after the currency is weakened will manufacturing return home. Gold revaluation can be used to buy back some bonds to reduce the interest expense.
Edit: to the drive by downvotes, if you’ve got a better idea then free to share it. This is the only option I’ve seen recently that may work before we’re in a total crisis. I don’t love it either, but this actually puts the process in our control rather than having it happen involuntarily. Continued devaluation of the dollar is guaranteed at this point.
Domestic debt mostly matters in that it represents money that is “tied up” rather than circulating within the economy for more productive use. It’s a little more complicated since 20% of the “owners” are internal to the government, such as Social Security. And there’s also institutions like mutual funds. But half is domestic private ownership.
If anything, the size of the deficit simply indicates that USD should be valued lower than it currently is, as there’s too many existing claims on future dollars. People bought those claims assuming that the dollar wouldn’t continue to weaken, but that was apparently a mistake.
FDR used a similar trick to devalue the dollar, allowing him to expand the money supply. Of course this was when the value of the dollar depended on the value of gold, so the motivation and the effects were different.
Billionaires know that and are already starting to speak against such taxes[0], before there's even any real possibility of them being adopted. They would rather see everything turn to shit than give back a single cent.
One has a disproportionate first-order effect on the poorer, it's true, but that wasn't your contention.
2. Why do you equate "capital investment" with "productivity"? If anything, the current situation should show you that record capital investments (in AI, mostly) are completely decorrelated from how the real economy is doing (which isn't great).
3. I never claimed that such taxes wouldn't cause harm to the economy, simply that cutting transfer payments would be much worse and wouldn't be enough to solve anything. We've been doing austerity for 50 years, it's time we think of something better.
If you want a healthy economy, you have to reduce inequalities. Transfer payments are a way to do it, wealth taxes are another. Cutting "entitlements" only worsens the problem.
If the goal is deficit reduction through spending cuts, policy needs to evaluate actual economic ROI. Programs like nutritional and income supports have positive fiscal multipliers, which is why blunt austerity measures trigger negative feedback loops and contract growth.
Spending cuts have a place, but treating entitlements as a slush fund without accounting for the economic return or impact on people isn’t a productive policy proposal.
I heard US healthcare, rather famously, spends more per capita than any country in the world, despite still being rather terrible. Maybe the solution is actually reforming it in an European way (including universal free healthcare)? Your other points are very interesting to me, especially negative feedback loops of austerity - I never thought about that before.
For the economic impact of austerity there has been a lot of good scholarship about this recently. Check out Austerity in Crisis?: A Narrative Review of Its Economic, Social, and Political Effects in Times of Crisis https://arxiv.org/abs/2510.10449
Fixing the healthcare system might be harder than fixing the budget at this point
That creates knock-on effects throughout the healthcare system:
* Doctor time is worth $xxx/hour, so every second counts. We hire a bunch of support staff to make sure doctors aren't "wasting" time on paperwork, taking vitals or talking to patients. Now it costs more to run a practice.
* Doctor time is worth $xxx/hour, so we need to make sure that health insurance only pays for procedures that people truly need. That leads to insurance companies hiring a bunch of doctors and nurses to adjudicate claims (that's expensive, plus fewer doctors practice medicine). It also leads to denied care.
* Doctors have a lot of money, so if a procedure goes bad and you want to sue someone, they make a juicy target. Now you have higher malpractice insurance, so doctors bill even more.
* Doctors are afraid of being sued (see previous), so they often order more tests than necessary to prove they are providing adequate care. Those tests cost money.
The cause of high doctor salaries is an artificial shortage of doctors. Medical schools collude to limit the number of medical students who matriculate each year, which squeezes supply.
We could very easily fix the American healthcare system in about 10 years by simply allowing doctors and nurses trained in other developed countries to practice here, plus forcing medical schools to accept more students.
Regarding the latter, there is no shortage of qualified applicants:
1. Nearly everyone who starts medical school finishes. Matriculants are so statistically overqualified that hardly anyone washes out.
2. Medical schools have silly-stupid entrance requirements which have little to do with being a good doctor. Beyond GPA, you need many hours of volunteer work outside of class, extracurricular activities, and often research experience. These admissions requirements are imposed because there are simply too many qualified applicants for the number of slots and med schools need some "fair" way to cull the herd.
As far as I can tell, the solution isn't nearly that hamfisted. It requires:
- Reinstituting rule-of-law (not just Trump; the whole system)
- Instituting basic proper management of funds
In Europe, I can walk into a government agency and be done in 15 minutes, with a smile from the administrator, for what would take months of fighting in the US. If a part of the government is breaking a rule, I can point them to it, and they'll follow it. Courts are slow, but follow clear laws; I don't see black robe syndrome. And police follow and enforce laws.
US used to be closer to that too; it actually led the world in good governance for much of history.
That's hard work of diving in and cleaning up every piece of the administration. There's no stomach for that. Until there is, the deficit will keep going up.
It's probably more correct to just say instituting. While Trump has certainly turned the rule of law on its head, it's a not-so-secret secret that the law has never really applied to the rich and powerful. If we're already going to be making fixes, we should make a real effort to honor the rule of law.
That would necessarily include things like reforming bail and fines so they scale properly with ability to pay, especially in the case of corporate fines.
It's system-wide.
It's not that rule-of-law was ever perfect in the US, but it was ahead of the world, and ahead of where it is today. Probably, it peaked a little bit after cases like Brown v. Board through around 1990.
From 1800-1900, there were more serious issues than today, obviously, but the baseline of comparison globally were largely dictators, kings, warlords, ..., as well as fledgling systems like the French Revolution and the Haitian Revolution.
1900-1960, the baseline was 2nd and 3rd world.
Today, the US is no longer in the lead, and to the contrary, towards the tail end of democratic developed countries. That's also a bigger club than in 1950.
https://www.pay.gov/public/form/start/23779454
In 2022, this amounted to $180,310 - so not even a drop in the bucket.
https://www.treasurydirect.gov/government/public-debt-report...
I'm half joking but I think we keep being saved from our bad decisions at the ballot box so we don't learn.