This Tax Day, we’re paying more than ever as DC drives up debt
Taxpayers are racing to submit their 1040s and beat the IRS’s Tuesday tax deadline.
Yet their payments – which are contributing to the highest sustained tax burden in American history – cannot keep pace with Washington’s spending spree.
This year, Washington will collect $36,313 per household in tax revenues (this includes all federal taxes, as even business taxes are eventually passed onto individuals).
Washington will spend $46,834 per household.
The resulting budget deficit of $10,521 per household brings the per household national debt held by the public to a staggering $194,063.
Are you getting your money’s worth?
Imagine what families could do if allowed to keep and spend more of that money themselves.
Despite lazy claims otherwise, falling revenues are not driving the red ink.
Washington is collecting $4,800 per household more in taxes than before the pandemic.
Yet federal spending has leaped by $6,300 per household over that same period.
And President Biden’s budget would hike spending by an additional $9,000 per household over the next decade (all these figures are adjusted for inflation).
Only a fool could deny that, sooner or later, your household taxes will rise accordingly.
New Treasury figures reveal the magnitude of the spending binge.
Federal spending for the first half of fiscal year 2023 is up 13% over the same period last year.
Within that total, Social Security and Medicare costs are up 10%, Medicaid spending has risen 8%, and interest costs on the national debt have jumped a remarkable 40%.
Overall, the deficit is 65% larger than last year at this time.
The Treasury is estimating a 2023 budget deficit that is $160 billion larger than the figure forecast by the Congressional Budget Office (CBO) just two months ago.
The deficit-drivers are no mystery.
Social Security and Medicare will run a cash shortfall of $561 billion this year and $13.4 trillion over the next decade.
President Biden has signed legislation and executive orders collectively adding $5 trillion to the 10-year deficits.
The toxic brew of soaring debt and rising interest rates has doubled annual interest costs in just three years, from $345 billion to nearly $700 billion.
These annual interest costs are projected to double again to $1.4 trillion within a decade under the CBO’s rosiest scenario.
At that point a decade from now, 20% of your taxes will go towards paying interest on debt, as it becomes the largest federal expenditure outside of Social Security and Medicare.
If interest rates continue rising, each percentage point will add $2.8 trillion in interest costs over the decade – roughly the cost of extending the 2017 tax cuts.
Washington is too paralyzed, partisan, and petrified of angry voters to stop the gravy train.
President Biden’s budget merely proposed that Washington borrow $17 trillion over the next decade, rather than the $20 trillion projected in the CBO baseline.
Biden would raise taxes by $5 trillion, but pour $2 trillion into bigger government.
His budget assumes that the 2017 tax cuts expire in 2026 for all families, including the middle- and lower-income families that the president promised would avoid new taxes.
It also assumes that Social Security’s trust fund slips into insolvency within a decade, triggering a 20% benefit cut.
Averting those two outcomes would push the president’s 10-year deficits back toward $20 trillion.
Republicans began the year pushing for substantial spending savings, but have seemingly surrendered to Biden on Social Security and Medicare reform, pledged no cuts to defense and veterans’ programs, and struggled to find significant savings in the remaining spending.
So while Washington fiddles, budget deficits steam towards $3 trillion within a decade even under (assumed) peace, prosperity, and low interest rates.
Taxpayers mailing their 1040s should prepare to send even more income to Uncle Sam in the years that follow.
Brian Riedl is a senior fellow at the Manhattan Institute. Follow him on Twitter @Brian_Riedl.
