Cutting Taxes When Over Budget?

$7.2 trillion in spending for a $2.1 trillion deficit.

A reader, Michael Fox, said it best: “I believe that you go right for the jugular. Our number one concern should be financial, the debt & the deficit. You hit it on the head. Please go after the financial waste in our elections. Thank you, Carl."

2025’s $2.1 trillion deficit results from the last tax cut in 2017 and over-budget spending this year. We were similarly over spent last year (2024).

The Congressional Budget Office (CBO) said 2025 will bring us a $1.9 trillion deficit from $7 trillion in budgeted expenditures—except we are $200 billion over that budget right now, and that says:

the 2025 deficit will be at least $2.1 trillion.

(We have to use CBO’s estimate of the budget since the Republicans have been unable to present a budget plan, and are unlikely to pass the CR anytime soon. They are trying to extend Nancy Pelosi’s last-approved fiscal year (FY) FY2021 budget.)

Simplify To Paint the Wagon

Much doublespeak from Republicans in Congress has confused our ability to figure out just what’s up. My way of simplifying is to start where we are and then do only the add ons they suggest. This will blow your mind. Start right there with a $2.1 trillion deficit this year.

The Big Add Ons

Then add the big ticket items that Republicans plan on adding to the budget for next year. They intend to keep the 2017 Tax Cut and Jobs Act (TCJA), so the current deficit including the TCJA, will be the port of embarkation for me.

Annual interest on our total outstanding $36 trillion in deficit loans is $952 billion, but surging interest rates and simplicity says call it an even $1 trillion for this exercise.

$2,100,000,000,000 Current Annual Deficit

$1,000,000,000,000 Annual Interest on $36 trillion. That is 2.8%, but new borrowings are going for 4.91%. CBO ignores this fact. Further, I do not see investors at lower rates. I see our creditworthiness deteriorating, and interest rates going to 5.8% over 10 years.

So we should add up what Republicans say.

• $350 billion added for defense, detention camps, border security.

• $50 billion farmer bailout (not identified yet)

• $164 billion tips and overtime deductions

Subtotal:

• $564 billion added to the ANNUAL budget or deducted from revenues.

NOW ADD THE TCJA TAX CUT (Being ignored)

• $460 billion TCJA plus $564 billion above added

Subtotal:

• $1.024 trillion added to annual current budget (all deficit spending)

But we were currently running a

• $1.640 trillion deficit (without TCJA)

• $1.024 trillion more is being added to give us:

• $2.664 annual deficit in 2026 and 2027.

The Big Deducts

Now look at the cuts from Republicans. I ballpark those at $1.3 trillion, rather than run them by line item. Medicaid and Medicare will be $1.2 trillion. We are fighting the cruel cuts with all of our might.

I cannot surmise an outcome at this juncture.

I see our annual deficit interest will go up 50%, from $1 to $1.5 trillion a year at 4.9% interest. By 2035, we will be paying interest of $3.6 trillion on $56 trillion of total debt.

I will try to enlighten. Extending the TCJA and adding other major things to the annual budget are not done by fiscally responsible people. It is time to protest in the streets, as Jackson Brown sang, til you go down.

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