Nobody in Washington Will Fix the Federal Budget Deficit

The numbers are in, and they are ugly. The federal budget deficit reached just under two trillion dollars in the fiscal year that ended September 30, according to Treasury figures released Friday and reported by Reuters. That makes it the largest shortfall in five years and the third-largest annual deficit ever recorded, trailing only the pandemic years. It was also the first full budget year of President Donald Trump's second term, and the gap came in about twelve percent wider than the year before, which means the president who promised to curb federal spending instead watched it rise on his watch, as the New York Times noted.

Here is the unpopular opinion: the federal budget deficit is less a problem Washington is trying to solve than a condition it has learned to live with. Fixing it would require the single thing nobody in power will do, which is tell voters no. Higher taxes, leaner benefit programs, a smaller military. Pick any of them and watch the proposal die on contact. So the deficit gets speeches and sternly worded resolutions while the arithmetic stays put.

The ledger behind the federal budget deficit

Start with the ledger. The Congressional Budget Office's September budget review found revenues grew while outlays grew faster, driven by interest on the national debt, major benefit programs, defense, and education. The Fiscal Times reported that total tax receipts hit a record, with individual income taxes doing most of the work. Outlays set a record too. The government is not starved for cash. It simply spends faster than it collects, and that gap keeps widening.

Look at where the extra spending went. A large share went to servicing debt the government already ran up. Interest payments on the national debt climbed to a record and now rank among the biggest items in the entire budget, eclipsed only by Social Security and the combined Medicare and Medicaid programs, Reuters reported. The national debt itself pushed past forty trillion this past summer. Tariff refunds took another bite: after the Supreme Court threw out a large share of the tariffs Trump imposed, the Treasury paid out one hundred forty-five billion in refunds, cutting net tariff income by eleven percent, according to Reuters. Defense spending rose six percent, and a Treasury official said it was unclear how much of that increase traced to the war Trump and Israel started against Iran earlier this year.

Everyone's villain, nobody's priority

Both parties have now had their turn presiding over the federal budget deficit. The country has posted an annual deficit for twenty-five straight years, according to the Fiscal Times, a streak that spans presidencies and congressional majorities of every stripe. A run that long means the blame is fully bipartisan, which is exactly why nobody fears it. Republicans blame benefit programs. Democrats blame tax cuts and defense. Both keep voting for the spending, because the alternative is telling their own voters the free lunch is over.

The latest congressional answer shows the pattern. House Resolution 981 is a bipartisan resolution setting a target of shrinking the federal budget deficit to three percent of GDP by 2030. It has eighteen co-sponsors from both parties, with Representatives Bill Huizenga and Scott Peters as lead sponsors, according to Peters's office. A resolution is not a law. It does not cut a dollar. It lets lawmakers pose with fiscal responsibility while the actual budget keeps setting records. Will McBride, the Tax Foundation's chief economist, said Congress and the administration keep ignoring the dangers of an unsustainable debt path, "making a crisis more likely to happen sooner rather than later." Strong words, delivered from the sidelines, while the spending continues.

The bill lands on Gen Z

The part that should bother young Americans most is the interest bill. Every dollar spent servicing old debt is a dollar that cannot fund anything new, and those payments compound while borrowing costs stay high. Treasury bond yields, which feed into mortgage, credit card, and auto loan rates, hit a twenty-year high earlier this month before easing, the Times reported. That is the federal budget deficit showing up in a car payment. Maya MacGuineas of the Committee for a Responsible Federal Budget said the country's fiscal health is failing and called for action, according to the Fiscal Times. She has been saying versions of that for years. The deficit has only grown.

So expect the ritual to continue after the midterms: stern statements, dueling blame, maybe another resolution with co-sponsors and no binding force. The federal budget deficit will still be there, because the people with the power to shrink it have made a rational, cynical calculation. The votes are in the outrage, not the arithmetic. The unpopular opinion is not that the deficit is fine. It is that Washington prefers it exactly like this: big enough to fundraise off, rarely urgent enough to fix.