Tax Policy, Fairness & the Economy - Part 5

In this series on Tax Policy, Fairness and the Economy, Cogport has presented background data needed to understand the current situation.

Before we dive into current and proposed Tax Policy, we need to consider how much the U.S. Government collects in Revenue and how much it Spends.  That is basic budget analysis which is provided in this report.

We have provided the revenue details on the collection side of the equation in prior posts. 

Now we add Spending and Deficits to the equation.

Here is a Bottom-Line Summary of Revenue, Spending, and Deficits:

Year                                   2016*                                      2022                            Increase     

Total U.S. Revenue        $ 3.99 Trillion                    $ 4.88 Trillion                     22%

Total U.S Spending        $ 4.71 Trillion                     $ 6.27 Trillion                    33%

Total Budget Deficit      $ 716 Billion                       $ 1.37 Trillion                   91%

*2016 Values are adjusted for inflation to 2022 level for comparison of Real Change.

In 2023, the Budget Deficit increased to $ 1.71 Trillion.

Observations:

The rapid trend up in Spending and Budget Deficit is not a sustainable path for any Country.

The Budget Deficit is paid by increase of the National Debt:

Year                                 2016*                                      2022                            Increase     

National Debt              $ 28.4 Trillion                       $ 33.5 Trillion             18%

In the last 3 years from 2021 through 2023, the National Debt increased by 12%, or an average of 4% per year.

Future of the National Debt

Assume that the 4% Growth in Annual Debt Level continues for the future. 

Here is a summary of Future National Debt:

Year                                   National Debt Total**

2030                                 $  47.0 Trillion

2035                                 $  57.2 Trillion

2040                                 $  69.5 Trillion

2045                                 $  84.6 Trillion

2050                                 $ 102.9 Trillion

**Values are not adjusted for future inflation.

From 2023 to 2050, the Federal Debt would increase by $ 67.2 Trillion, or 188%.

In 25 years the U.S. would be a third world, debt-ridden country with a falling standard of living.

Why the importance to control Deficit Spending ?

Here is what happens as the National Debt grows:

• Interest expenses will consume a much larger part of the Federal Budget.

• The creditworthiness rating of the U.S. will be reduced.  That means higher interest rates for government and personal loans.

• The value of the U.S. Dollar will decline, making imports more expensive and causing inflation.

Summary

With this report we have the foundational information to evaluate the Demands and Fairness of Tax Policy for Future Reports in this Series.

The Table below is provided for a Reference breakdown of Major Categories of Federal Spending.

David Hollaender                           October 13, 2024

Cogport.com