Maya MacGuineas, the President of the Committee for a Responsible Federal Budget, recently raised alarms over America’s staggering $38 trillion national debt, which she describes as “unsustainable.” She emphasizes the urgent need for lawmakers to focus on entitlement reform and restore fiscal responsibility.
New data from the Congressional Budget Office (CBO) indicates that the federal government is facing a massive budget deficit of $1.8 trillion for the fiscal year 2025. This deficit is slightly lower than the $1.817 trillion deficit recorded in the previous year, but it still raises concerns about future financial stability.
A significant factor contributing to this deficit is the rising cost of servicing the national debt, which has surpassed $1 trillion for the first time. The costs increased by $80 billion, or 8%, reflecting the burden of the increasing debt.
Overall federal spending also saw an increase of $301 billion, or 4%, compared to the previous year. Social Security is a notable contributor to this rise, with expenses going up by $121 billion, largely due to higher benefit payments and a growing number of beneficiaries as the population ages.
Medicare spending increased by $72 billion, or 8%, as more retirees entered the program, alongside higher healthcare costs for beneficiaries. Medicaid costs grew by $52 billion due to rising expenses per enrollee.
Additionally, spending in various federal agencies is on the rise. The Department of Veterans Affairs, for example, saw an increase of $41 billion, or 12%, as more veterans utilized healthcare services.
Spending for the Department of Defense also grew, reflecting a $38 billion rise, or 5%, as efforts to maintain national security continue to require additional funding.
On a more positive note, total tax collections increased by $308 billion, or 6%, during the same period. This growth was tempered somewhat by delayed payment deadlines for taxpayers in disaster areas.
However, corporate income tax revenue fell by $77 billion, or 15%, partly due to recent legislation that allows for larger deductions, prompting concerns about the long-term implications for corporate tax contributions.
As our national debt continues to climb, the pressing question remains: how will our leaders take action to ensure a fiscally sound future for America?
