According to the Treasury Department, this week the US federal debt reached $40 trillion with a T, which is what happens when there’s less revenue coming in than spending going out. The annual interest on the total debt comes to a trillion dollars, which makes it the second-largest single annual outlay, behind Social Security, which at least has its own taxation to keep it mostly afloat.
Needless to say, the usual Republican voices are insisting that we can’t afford to pay for anything at all other than an ever-larger military as well as the militarized deportation of millions of people who keep the economy going. Plus whatever dumb monuments to himself Donald Trump wants, including his whims about redesigning aircraft carriers to make them less modern.
They may not say it out loud before the midterm elections, but Republicans will soon resume their ceaseless calls for massive cuts to Social Security, Medicare and Medicaid, and whatever’s left of all our social safety net programs, because America’s low-income folks have too easy a time of it. And they’ll again/always be blaming Barack Obama and Joe Biden for profligate spending, even though Republicans’ massive tax cuts and bad governance (like Trump’s costly, pointless war on Iran and his failed tariffs) have made the nation poorer and weaker.
Yes, this is where we point out yet again that the primary driver of federal debt over the last 25 years has been the huge tax cuts for the rich under George W. Bush and Donald Trump. As an analysis by the Center for American Progress indicates, without the Bush and Trump tax cuts, “revenues would be on track to keep pace with spending indefinitely, and the debt ratio (debt as a percentage of the economy) would be declining.” We would like to visit the alternative universe where that happened.
That analysis of the impact of tax cuts on the debt was published in 2023, so it doesn’t even include the additional budget shortfalls from Trump’s Big Blowies for Billionaires Bill last year. The CBO projected in February that the federal deficit (the annual gap between revenue and spending) for fiscal 2026 will be $1.9 trillion, growing to $3.1 trillion by 2036. All told, just Trump’s stupid second term tax cuts will add another $4.7 trillion to the national debt over the next decade.
Haha, remember how Trump promised to eliminate the budget deficit and even to pay off the entire debt, because he’s a financial genius?
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But don’t worry! Treasury Secretary Scott Bessent assured Americans Thursday that all the US needs to do is have a booming economy and then the debt will go right down, you bet. Bessent told CNBC anchor Sara Eisen, “There’s nothing magic about the $40 trillion number, and we can grow our way out of that.” He claimed that this year’s deficit — remember, nearly $2 trillion per the CBO — was higher than it should be because the Supreme Court found Trump had no authority to impose “emergency” tariffs, and has to refund about $100 billion in revenue to businesses. He is very good at math.
Bessent also blamed Biden, a ritual that should be accompanied by some rote gesture like warding off the evil eye.
In addition to supply-side happy talk and deflecting responsibility, Bessent also tried to calm down bond markets this week by announcing the Treasury will buy back some $4 billion in long-term Treasury bonds, double its original buyback plan. In theory, that was supposed to make borrowing less expensive by making bonds less attractive investments. Some $32 trillion of the national debt is held by investors and the public (including other countries), because US debt is, even when the government seems crazy, considered among the most secure investments in the world.
As the AP explains, the buybacks “are intended to reduce the supply of 10-year to 30-year bonds and boost their prices. Yields on bonds fall when their prices rise.” That’s a hella big thing, since Treasury bonds are a benchmark for mortgage rates and other borrowing. Markets are also being flooded with corporate bonds as big tech companies take on debt to finance huge AI data centers (never mind whether AI is worth the gamble). The resulting “deluge of bond offerings is giving bond investors more to choose from, which lowers prices for bonds and pushes up their yields.”
Bessent’s gambit worked for about half a day after he announced the buybacks. Returns on 30-year bonds dropped from around 5.3 percent annually Tuesday to 5.18 percent, but began climbing again, reaching 5.23 percent by Thursday, largely erasing the lower rates Bessent hoped would calm things down.
As JPMorgan bond boffin James Sullivan explained on CNBC Thursday, Bessent’s strategy is to buy back long-duration bonds while issuing more short-term bonds, which provided a bit of relief but doesn’t address the debt worries that underly the market’s jitters. “It’s a little bit like paying your mortgage with your credit card. It can work for a while, but eventually the mismatch starts to become more obvious,” Sullivan said.
One way to get the federal debt under control would be to gradually increase tax revenue by phasing in a repeal of those Republican tax cuts. Heck, we could stabilize Social Security and Medicare by eliminating (or just raising!) the $176,100 income cap on Social Security tax, so the wealthy will pay their fair share.
But the billionaire class wouldn’t like any of that, and would cry that they’ll just go out of business instead. So get ready for even more rightwing panicmongering over “communism” and demands to cut Medicare, Medicaid, and Social Security, lest Grandma turn Red.
[NPR / CNBC / Common Dreams / Center for American Progress / The Hill / NYT (gift link) / WaPo (gift link) / AP]
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Why exactly do Republicans always get regarded as the more fiscally responsible party? They have consistently fucked up American's finances, every chance they've gotten.
The debt is at $40 trillion, I have explosive diarrhea, my kids have measles, my son has been deployed for over 7 months, I can’t afford groceries and ICE is shoooting people in the streets. But Jon Ossoff’s attacks on Natalie Harp make me feel uneasy so I’m not sure who I’m going to vote for in November.
By Susan Swing voter