The US Budget Deficit and Its Implications for the Future Economy

The current US budget deficit, standing at $3.1 trillion as of September 30, 2020, is a topic of significant concern within the political and economic communities. This article examines whether this level of deficit constitutes a cause for alarm and explores the economic implications for the future.

Overview of the Deficit and Its Causes

The US budget deficit, particularly if sustained at high levels, is a cause for concern. The situation is exacerbated by a staunch refusal by Republicans to raise taxes and a controversial move to defund the IRS, even when taxes they support are collected. This stance leads to an unsustainable budget situation, as is evident in ongoing debt ceiling debates.

Economic Unsustainability

Staggering annual deficits coupled with a large overall deficit pose a significant threat to the economic sustainability of the United States. Should these levels persist, the country may face severe consequences. If the deficit remains consistently above $3 trillion for three consecutive fiscal years, it would be deeply concerning. However, there is a glimmer of hope as the next administration aims to bring deficit levels down to under $1 trillion by 2022, and to maintain a minimal difference between one to two hundred billion thereafter.

Pelosi’s Role and Future Projections

While the prospect of a healthier balanced budget is promising, the political landscape remains fraught with tension. Representative Pelosi, a key figure in the current administration, is keen to add an additional $3.4 trillion to the national debt. Her argument, however, is likely to place the blame for this increase on former President Trump, reflecting the highly polarized nature of the debate.

The Reckoning Is Coming: A Wake-Up Call for All

The real issue, however, lies in the belief among many lawmakers, Democrats and Republicans alike, that there will never be a reckoning. The mentality is that if there is a problem, it will be postponed into the future and used to secure votes in the present. This approach is not sustainable for a country as large and complex as the United States.

Ultimately, every entity, from individuals to nations, must live within its means. Continuous borrowing without a plan to culminate amortization and repayment will eventually lead to a point where lenders say, “That’s enough.” From that moment onward, the borrower must live within its means and pay back what was loaned. This shift will mark a significant change and will pose significant challenges for the US economy.

Conclusion on the US National Debt and Future Projections

Given the current level of the US national debt, which stands at over $27 trillion and is projected to rise, the debate over increasing deficits and adding to the existing national debt is critical. While the intended deficit reduction by the next administration is a positive move, the justification for adding significant sums to the debt remains a contentious issue.

The ongoing debate over the budget deficit highlights the importance of fiscal responsibility and the need to consider long-term economic sustainability. Failure to address these issues could have severe and far-reaching consequences on the stability and growth of the United States economy.