It’s easy to forget that less than a generation ago, the US government’s fiscal trajectory was excellent.
In 2001, the federal government had been running an annual surplus for four years and the Congressional Budget Office even projected that the national debt would effectively be zero by 2009.
That — suffice to say — did not happen. The national debt instead grew, reaching $10 trillion in 2008 and then quadrupling over the next 18 years to this week’s gloomy milestone of over $40 trillion in total debt.
“The debt spiral is starting,” warned Marc Goldwein, senior vice president at the Committee for a Responsible Federal Budget (CRFB), whose group has laid out in unsparing detail how a 1.2% surplus in 2001 morphed into 6% deficits that are now the norm, though historically these levels were only seen during wars or deep recessions.
The latest projections are that the US government will run a deficit of $2.1 trillion when the government’s fiscal year ends on Sept. 30. The cost of simply servicing the debt now makes up 15% of all US government spending — more than the government spends on defense.
How we got here
Three types of decisions were often made with bipartisan support and drove the debt to such high levels in just a few years, the CRFB detailed in 2024.
The analysis was conducted before Trump’s One Big Beautiful Bill Act — which is projected to add more than $4 trillion to the national debt on its own — yet still found that major tax cuts enacted under George W. Bush and in Trump’s first term are responsible for 37% of the current debt.
These moves — in addition to wars in Afghanistan and Iraq and the bursting of the dot-com bubble — first sent government finances awry. The tax cuts immediately cut into revenues and were then extended (often with Democrats’ support), deepening the fiscal impact and beginning to dig the current fiscal hole.
Perhaps most striking is how widely the blame can be allotted. Spending increases, which Democrats have often pushed most strongly for, are a root cause of another 33% of the current US debt, according to the CRFB.
Much of this increased spending was approved by members of both parties as an aging population, which spurred major Medicare expansions, spiked the cost of the social safety net to the point where Social Security, Medicare, and Medicaid now consume about half of the federal budget every year.
“Absent these tax cuts and spending increases, the debt would be fully paid off,” the CFRB analysis notes.
