Why Americans Are Concerned About the Budget Deficit – Again

The federal budget deficit, an on-again, off-again concern for the US electorate and economy, is back on and may stay that way for a while. Chronic challenges such as America’s aging population – as more people retire, the government has to shell out more in Social Security pension payments and Medicare health benefits – have been compounded in recent years by tax cuts and spending binges, swelling the gap between revenue raised and funding appropriated. By raising interest rates to their highest levels in more than 20 years to fight inflation, the Federal Reserve has made the cost of financing those deficits go up as well.

Through the first 11 months of the fiscal year ending on Sept. 30, the deficit was $1.5 trillion, up sharply from $946 billion in the comparable period a year earlier. That sort of surge would usually happen only when the government is in recession-fighting mode, not when the economy is growing at a decent clip. Even judged in the context of the US economy, the deficit is imposing. It’s expected to clock in at about 6% of gross domestic product this year – a level never reached in the six decades between the aftermath of World War II and the 2008 crash. And each annual deficit adds to an already mammoth amount of publicly held debt — $26.3 trillion as of Sept. 29, nearly the size of the economy.