The United States is currently facing a major deficit, with the federal government spending $2 trillion more than it has raised in taxes over the past year. Despite the fact that this deficit is not due to a recession or stimulus spending, but rather to America’s longest period of low unemployment in fifty years, it has not been below 3% of GDP since 2015. Furthermore, the country’s net debts are expected to surpass 100% of GDP next year.
The rising deficit can be attributed to a variety of factors, including the costs of wars, the global financial crisis, and the COVID-19 pandemic. Unfunded tax cuts and stimulus programs have only added to the country’s fiscal challenges. While both Republicans and Democrats claim to prioritize fiscal responsibility, their actions often contradict their words. As a result, the next president will face a crucial decision regarding the renewal of Donald Trump’s tax cuts from 2017, which could further worsen America’s fiscal outlook.
In recent years, near-zero interest rates made managing the country’s large debts more feasible. However, with rates now higher, more money is being spent by the government on servicing debt than on national defense. This shift in interest rates has only accelerated the need for decisive action to address America’s growing deficit. Failure to take action will inevitably lead to a continued deterioration of America’s fiscal trajectory and pose an economic challenge for future generations.
In conclusion, America’s budget is currently facing a major deficit that requires urgent attention from policymakers. The rising deficit is caused by various factors such as wars costs and pandemics but also unfunded tax cuts and stimulus programs have added significantly to our fiscal challenges. It is essential for both parties to work together and take decisive action before it’s too late for our economy and future generations.
