(The Center Square) – The U.S. Treasury Department released its monthly fiscal update showing the federal deficit so far this fiscal year has already hit $1.5 trillion.
The federal data comes just days after the national debt surpassed $35 trillion, an unprecedented figure that worries economists and budget analysts.
For now, though, neither Republicans nor Democrats have prioritized getting the deficit under control or showed unity in putting a plan forward to do so.
"The fiscal outlook makes for grim reading – in just three years, within the next presidential term, our national debt will exceed an all-time record share of the economy," Maya MacGuineas, president of the Committee for a Responsible Federal Budget, said in a statement in response to the latest data. "Yet despite the fact that whoever wins the White House in November will oversee this milestone, we’re hearing shockingly little in the way of plans to turn things around. What we have gotten is a taste of the many ways things can get worse, including promises to extend some or all of the expiring tax cuts without a plan to make up for that lost revenue as well as promises to not touch Social Security and Medicare as they run ever-closer toward insolvency and automatic benefit cuts."
Before the COVID-19 pandemic, deficits over $1 trillion a year were unheard of, but since the pandemic they have seemingly become the new normal.
Both former President Donald Trump and Vice President Kamala Harris, expected to face off for the presidency this November, recently unveiled their plans to cut taxes on tips, a move that could raise deficits by $100 billion to $200 billion over the next decade, as The Center Square previously reported .
While the candidates might have a plan to significantly cut spending, they have talked little to none about it and not indicated it would be enough to put the U.S. fiscal house in order.
Harris has released very few policy priorities and Trump released the “2024 GOP Platform” in a post on social media Tuesday that made no mention of fiscal reform besides promising to “end inflation.”
The political element of the building debt has real financial implications. Aside from either sides’ unwillingness to substantially cut spending, international credit agencies cite the U.S. political dysfunction as a concern.
In a major warning sign to the U.S. that was largely ignored, Fitch Ratings, one of the top three international credit rating agencies, downgraded the United States government’s credit rating from the highest level of AAA down one tier to AA+, as The Center Square previously reported .
At the time, the group cited political dysfunction as part of its reasoning.
“In Fitch’s view, there has been a steady deterioration in standards of governance over the last 20 years, including on fiscal and debt matters, notwithstanding the June bipartisan agreement to suspend the debt limit until January 2025,” Fitch said at the time. “The repeated debt-limit political standoffs and last-minute resolutions have eroded confidence in fiscal management. In addition, the government lacks a medium-term fiscal framework, unlike most peers, and has a complex budgeting process.”
The fiscal data amounts to the federal government borrowing $5 billion per day so far this year.
“Our elected officials have slept through so many alarm bells that we’ve racked up over $1.5 trillion in deficits this year, and the interest on our debt alone is more than we spend on national defense,” MacGuineas said.
A graphic from the Treasury Department for income and payments in the month of July shows just how significant the interest payments on the national debt have become:
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