"That is largely because the main drivers of spending kept rising: social programs, including Social Security and Medicare, and interest on the public debt, which topped $1 trillion by one measure for the first time."
It sure would be nice if, instead of cutting taxes for the ultra-wealthy, that money being given back to the people who need it the absolute least were instead used to reduce the public debt.
And how much money did DOGE spend on its quest to save nothing by trashing scientific research?
The thing is, the most common spending that they attempt to cut is spending that has multiplier effects on the economy, because it's giving money (whether directly or indirectly) to the poorest people.
Really? Please provide a decline in net dollars (excluding projected drawdowns) that demonstrates this point.
On a dollar-by-dollar basis, regardless of economic station, _every_ American has seen a combined discretionary + non-discretionary increase in benefits since 1980. The group that is less advantaged is the upper-middle class, which has seen relative stagnation.
I don’t think the next administration, whichever party ends up winning, will be likely to reverse these tariffs just based on how much revenue they bring in for the federal government.
Reducing spending is of course another different problem altogether.
It raises taxes but arguably impacts GDP in a very direct and equal way, so it mostly nets out. The argument that follows from there would be that taxing the rich would have less of an impact on GDP.
Do you not have some influence over your future morals? There's always a religious reference to say the same thing e.g "The heart of man plans his way, but the Lord establishes his steps"?
Social security doesn't contribute to the general budget deficit. Its funding source is totally distinct. It doesn't and can't (under current laws) borrow to fund itself—if nothing changes, then as the fund runs low, payments will be reduced.
Mention of Social Security as a major driver of the budget deficit is a red flag you're reading something by someone who's ill-informed on the topic, or else they're deliberately bullshitting you.
You’re only considering one part of the system, not the whole. As the GAO puts it[1]:
> Intragovernmental debt holdings represent federal debt owed by Treasury to federal government accounts—primarily federal trust funds such as those established for Social Security and Medicare—that typically have an obligation to invest their excess annual receipts (including interest earnings) over disbursements in federal securities.
> Debt held by the public represents a claim on today’s taxpayers and absorbs resources from today’s economy, meaning that when an investor buys Treasury securities it is not investing that money elsewhere in the economy.
> Intragovernmental debt holdings reflect a claim on taxpayers and the economy in the future. Specifically, when federal government accounts redeem Treasury securities to obtain cash to fund expenditures, Treasury usually borrows from the public to finance these redemptions.
Or to put it simply the excess contributions are lent to the Treasury who uses it for general government expenditures. When it’s time to pay it back the Treasury can either pay it with tax revenue assuming it has excess or has cut spending elsewhere or it will be forced to borrow it. The latter is generally what happens.
I wouldn’t be so quick to call people ill-informed on this subject if I were you.
No, I considered the whole thing. It's worth, in some contexts, pointing out that we borrow to service existing debt, but it remains irrelevant that one of the owners of that debt happens to be the Social Security Trust Fund, if we're talking about the budget deficit.
We halt all spending on Social Security tomorrow. Great, wonderful. Buuuuut... that debt still exists and nothing whatsoever changes for the budget deficit. [EDIT pedantic nuance: technically it might let us spread repaying that debt over a longer period, but the debt itself remains identical, unless we decide we're just gonna let it sit there and never pay anything against it, which is identical to nullifying it, which, see next paragraph]
Unless we're prepared to nullify debts we've already incurred, in which case, why single out the debt Social Security owns for that treatment?
> I wouldn’t be so quick to call people ill-informed on this subject if I were you.
Nah, gonna continue until I see any reason to stop.
>why single out the debt Social Security owns for that treatment
Because it's the biggest slice of the federal budget pie, and currently it goes to the segment of the US population with the highest average net worth.
Whether you think it's right or wrong, it is a massive chunk of mandatory spending. Combined with Medicare, it's close to 40% of the entire budget, and it is ultimately unsustainable.
> Because it's the biggest slice of the federal budget pie
It's not spent out of the general fund. The only—only—effect Social Security spending has on the budget is that for part of its spending, it calls in debt the general budget already owes it when it spend its money (which is invested in government debt). That money came from a dedicated, separate source, and wasn't generated by deficit spending, but by actual income. That money bought US government debt, so we owe that back, and that repayment is the only part of any of this that affects the budget.
[EDIT] To boil this down for international readers or people who just haven't ever bothered to learn the super interesting (LOL) way Social Security is structured:
1) Social Security is funded by the majority of the money that comes out of workers' paychecks under the "FICA" heading (some goes to other benefits-related stuff, but most of it goes to Social Security). This is a static proportion of ~15%, not progressively bracketed like ordinary income tax. About half is paid separately by your employer, typically, but people filing as independent contractors (form 1099) pay the whole shebang. This tax also phases out abruptly at a certain level (I forget exactly where, something like $200k for an individual tax filer I think) which means it's actually not just not-progressive, but rather extremely regressive (i.e. it preferentially targets income dollars with the highest marginal utility, not the lowest)
2) Under certain circumstances, but mostly when you get sufficiently old, you can start to draw benefits (payments back to you) out of Social Security. These benefits are (basically) adjusted for how much you paid in. Paid in more? Get more back.
3) For a long time Social Security ran a surplus from their FICA income, so that money went into the Social Security "Trust Fund". This money is not available to the general budget. The law is structured such that the excess money couldn't just be spent on other stuff.
4) ... however, you don't really want money just sitting around inflating away, you want to invest it. Plus, sure would be nice for the rest of the budget to access that big tempting pile of money somehow, if you're a politician and kinda an asshole (but I repeat myself). So, the trust fund bought government debt.
5) Social Security is now deficit spending, because we have a fuckload of old people drawing benefits from it, and not enough young people funding it to balance that out. That means it's spending down the trust fund (ITS OWN MONEY that it ALREADY COLLECTED). This requires cashing in some of those IOUs.
6) "Well when it runs out of money it saved up, won't that mean that spending becomes deficit spending against the general budget?" Nope! Not without changing the law, anyway (which opens up practically infinite possibilities, so it's kinda pointless to introduce to a discussion of "how does this work?"). What'll happen is the SSA (Social Security Administration) has to cut benefits until payments balance with income (from the FICA tax).
How is the amount of money paid as interest dependent on the measure used? I can understand different interpretations of some expenses as capex vs opex, and similar other questions. But interest?
Once the government is involved, everything is "interpretation." Unemployment? Well... it depends on what you mean by unemployment. We changed how we "count" a few years back. Owe? It depends what you mean by "owe." What is the definition of "is?"
If I buy a $1000 bond with a 1 year duration and 2% coupon for $950, realizing $70 of net income from it over the following year ($20 coupon payments, $50 "extra" principal return), has the government paid $20 or $70 of interest?
I'm not sure there's a significant difference in practice, but technically the $50 would be part of the bond's debt principal, not interest.
A bond with a face value of $1000 means the government has $1000 of debt regardless of what is paid for the bond.
The coupon payments represent the "interest" on that debt - the $20 coupon means the government is paying $20 of interest per year.
Paying below face value doesn’t make the difference "interest." It simply means investors are buying the bond at a discount, so the government receives less cash upfront in exchange for repaying the full $1,000 at maturity. Bonds differ from traditional loans in that their market price can fluctuate, but the debt obligation remains fixed at the face value.
In practice, the government's accounting labels the discount as an "interest expense", so it still gets captured as interest in the budget.
That's a reasonable interpretation from the Treasury's perspective. But if you ask the IRS, I've realized all $70 as interest income ($50 as OID, which they consider a form of interest).
(And yes, coupons pay 2x yearly, but they are quoted on an annual basis; I would receive two $10 payments.)
Yes, secondary sellers can claim capital losses. But they typically go for a discount even at the primary Treasury auction, so there's still more than $20 of total profit after netting across holders.
"That is largely because the main drivers of spending kept rising: social programs, including Social Security and Medicare, and interest on the public debt, which topped $1 trillion by one measure for the first time."