Congratulations to all the winners of the 2024 elections!
Now comes the hard part.
You have gained the offices you sought, but with that honor you have also taken on the responsibility of governing a nation that finished its last fiscal year with a budget deficit of $1.8 trillion. At 6.4 percent of the gross domestic product (GDP), the deficit was far above the average over the past 50 years (3.7 percent of GDP). Moreover, it came despite solid economic growth and low unemployment. No one-off circumstance or crisis pushed the deficit to such levels. We have dug ourselves into an enormous hole by routinely and for the most part automatically spending much more than we tax.
Looking ahead, it doesn’t get any better. The Congressional Budget Office (CBO) projects that under current law deficits will average $2.2 trillion over the next 10 years (6.3 percent of GDP).
Debt held by the public is on track to set a new record high as a share of GDP in 2027 and keep rising without end into the future. Interest on the debt, which exceeded spending on both Medicare and defense in 2024, is projected to set a record as a share of GDP next year.
Are you OK with that? And if so, how do you explain to your younger constituents that refusing to make the spending cuts or tax increases needed to put the budget on a sustainable path is worth the resulting mountain of debt this will leave them to cope with?
How will you explain to your older constituents that doing nothing to avoid the pending insolvency of the Social Security Old Age and Survivors Insurance Trust Fund (OASI) in 2033 or the Medicare Hospital Insurance Trust Fund (HI) in 2036 is better than the automatic cuts that will occur in these programs when the trust funds run dry?
Given this daunting outlook, election winners should also take a hard look at the magnitude of the changes that would be required to simply stabilize the debt at its current share of GDP. The results might come as a shock. According to CBO, the debt is projected to rise from 99 percent of GDP in 2024 to 122 percent in 2034. Keeping the debt at 99 percent of GDP in 2034 would require spending cuts and/or tax increases totaling about $8 trillion plus the resulting savings from lower interest payments.
A problem that large is not going to be solved quickly and it certainly is not going to be solved without some degree of bipartisan cooperation. But it must be solved. Regardless of your preferred policy agenda, nothing can last for long if it is built on a foundation of unsustainable debt.
For the sake of our nation’s future, please keep these considerations in mind as you take office in January.
