Submitted by Taps Coogan on the 14th of February 2019.
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This article will try to put the staggering size of the US federal government deficit in perspective.
The US federal government received $3.328 trillion in revenue and spent $4.599 trillion in fiscal year 2018, resulting in a $1.271 trillion deficit.
The breakdown is as follows:
The US federal government received roughly $3.328 trillion in various tax revenues in FY 2018. The FY 2018 budget resulted in $4.1 trillion dollars of spending and a $799 billion budget deficit. However, the national debt increased by $1.271 trillion during FY 2018, 63% more than would be expected based on the budget deficit alone. That is because the federal government spent another $472 billion in off-budget ’emergency’ spending, student loans, IOUs to the Social Security ‘Trust Fund,’ etc… That off-budget spending brought total federal spending for FY 2018 to $4.599 trillion. The real federal deficit is $1.271 trillion, the amount that the national debt increased.
How could the federal government stop the growth in the national debt without reducing entitlement spending or off-budget ’emergency’ funding, while continuing to service the national debt?
Simple. It would have to eliminate all other functions of the federal government.
An estimated $2.546 trillion (PDF) was spent on mandatory entitlement programs like Social Security, Medicaid, Medicare, Disability Insurance, Deposit Insurance, etc… in FY 2018. Based on the increase in national debt in FY 2018, another $472 billion went to off-budget funding for oversees military operations, disaster relief, and various odds and ends. Another $325 billion went to servicing the interest on the national debt. Combined, mandatory entitlements, off-budget spending, and the interest on the national debt cost $3.343 trillion. That is slightly less than total federal government revenue in FY 2018: $3.328 trillion.
In other words, for the federal government to stop the growth in the national debt in FY 2018 without reducing mandatory entitlement spending, off-budget ’emergency’ spending, and the interest on the national debt, it would have to eliminate all other forms of spending, and then some. It would have to eliminate the entire discretionary spending budget. That means it would have to eliminate all budgeted funding to the entire executive branch, including every department from the FBI to the IRS, EPA, NASA, and the Whitehouse. It would have to eliminate the entire military except for off-budget emergency funding. It would have to eliminate all budgeted funding to the federal judicial branch, prison system, and to Congress itself.
Given that the interest expense on the national debt is the fastest growing element of federal spending (it’s expected to triple in the next ten years), followed by mandatory entitlement programs, the deficit problem is only going to get worse in coming years.
What about raising taxes? There are roughly 127 million households in the US. To be in the top 1%, you need a household income of over $422,000, with the average ‘1%’ household making $1.32 million a year. Let’s say we taxed 100% of income over $422,000. and let’s pretend that all those rich people with homes all over the world actually stayed in the US and kept paying 100% taxes. That would only raise $1.1 trillion in taxes. 100% tax rates on the top 1% wouldn’t even be enough to balance the real federal deficit for a year. In reality, it would drive the 1%, who already pay 37% of all income tax, to leave the US and stop paying US income tax all together. Just ask France.
Reckless deficit spending by both parties has brought the US to an absurd place. Massive growth in entitlement programs, off budget spending, and the interest expense on the national debt has reached a point where they consume 100% of tax revenue, leaving all traditional functions of government to be funded entirely on debt. That is, in turn, causing rapid growth in the national debt and its interest expense, creating a negative feedback loop that is quickly becoming impossible to escape.
America must tackle the deficit, including entitlement reform, before a fiscal crisis ensues.
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