Revenues are rising, but spending is rising more
Federal revenues are up 3% in 2026 compared to the previous year. While corporate tax revenues have fallen, income and payroll tax collections have increased. But the revenue increase is not enough. According to the CBO, federal spending has increased by 5%, with the cost of servicing the huge national debt one of the biggest fiscal threats. Interest on the national debt has increased by 14% compared to last year. At the same time, increased costs are also being recorded in key areas of the American government, such as Social Security, Medicare, Medicaid and defense.From $1.9 Trillion to $2.1 Trillion – Trump’s Tariffs and the Revenue Gap
The CBO had originally projected this year’s deficit to be $1.9 trillion. The estimate was revised up, largely due to lower-than-expected tariff revenue after the Supreme Court ruled in February to block tariffs imposed by President Donald Trump. Although Trump has since imposed new tariffs, the CBO still estimates that federal revenue will be $250 billion lower than originally projected. To date, about $100 billion has been returned to companies, under an order from the U.S. Court of International Trade.“We’re Borrowing Nearly $6 Billion a Day”
Maya MacGuineas, chairwoman of the Committee for a Responsible Federal Budget, described the situation in dramatic terms. “We’ve borrowed a staggering $1.8 trillion this fiscal year, with $431 billion in July alone, which is almost **$6 billion a day,” she said. As she pointed out, the U.S. is on track to exceed $2 trillion in new borrowing this fiscal year, despite the fact that the economy is not in recession. “This is not normal,” she said.The U.S. debt may become mathematically impossible to repay
The problem, however, is not limited to this year’s deficit. The University of Pennsylvania recently estimated that, under current policy, it is likely to become mathematically impossible for the United States to pay off its debt by 2048. And this estimate was made before Donald Trump asked Congress for a 19% increase in discretionary spending next year. If approved, it would be the second-largest spending increase in at least 60 years.The crisis of accuracy and political inertia
The cost of living crisis is currently the dominant political issue in the United States. Yet, according to the text, neither major political party has made a substantive commitment to reducing government deficits. And therein lies the biggest problem for the American economy. As long as Washington continues to borrow at record rates, while interest on the debt and government spending increase at the same time, the fiscal crisis shows no sign of abating. On the contrary, America seems to be heading towards a vicious cycle of debt, deficits, and new borrowing, from which it will become increasingly difficult to escape.Please follow and like us:
