Why Is the US Deficit So Big? Depends on Who You Ask

finance
Created 7/23/2024
Updated 7/23/2024

The US federal deficit is nearing USD1.9 trillion for the fiscal year ending September 30, driven by increased mandatory spending on Social Security, healthcare, and rising interest costs on public debt. Democrats blame Trump-era tax cuts for shrinking revenue, while Republicans point to Biden's spending. Revenue is slightly above the historical average, but spending has surged, mainly due to entitlements and interest payments. Potential solutions to reduce the US deficit include raising taxes on wealthy households, cutting some Social Security and Medicare benefits, and possibly increasing the eligibility ages for these programs. Economists warn that without action, the deficit will harm the economy.

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