Taxes, Spending, Deficit – The Bad, The Ugly, The Pain
There has been a lot of discussion around US Federal Spending and Elon Musk’s DOGE taking aim at wasteful, unwarranted taxpayer spending.
Most Americans know that the Federal Deficit bill is around $36 Trillion and rising. It rises $7 Billion a day!
For any American, regardless of wealth, that is a difficult number to grasp. Why is it rising so fast? The US spends $6.5 Trillion per year but only collects $4.7 Trillion in Taxes. $1.8 Trillion in over in spending!
The spending is as follows:
Social Security & Medicare – $2.4 trillion (40%)
Defense & Military – $900 billion (15%)
Interest on National Debt – $1 trillion+ (16%)
Welfare & Safety Net Programs – $900 billion (15%)
Infrastructure, Education, Science, & Energy – $700 billion (12%)
Everything Else – $500 billion (8%)
$1 Trillion is spent on the interest alone! The government issues Treasuries securities to the public to cover the losses every year. The losses have total $36 Trillion over the past couple of decades.
Well, why don’t we just raise taxes on the wealthy? They need to pay their fair share! We have all heard that argument.
Here is the breakdown who pays what share of taxes:
Income Group AGI Threshold % of Total AGI Earned % of Federal Income Taxes Paid Federal Income Taxes Paid (in trillions)
Top 1% Above $540,000 22.20% 42.30% $1.99
Top 5% Above $218,000 38.10% 60.00% $2.82
Top 10% Above $151,000 49.60% 71.00% $3.34
Top 25% Above $87,000 71.00% 87.00% $4.09
Top 50% Above $41,000 89.00% 97.00% $4.56
Bottom 50% Below $41,000 11.00% 3.00% $0.14
Top 10% of earners pay 71% of the taxes.
Now lets add another 10% increase in taxes under the current tax code to the top 10% of the earners. That would only collect another $334 Billion in Tax Revenue!
$1.8 Trillion deficit less the additional $334 Billion in Tax Revenue- We still have a $1.5 Trillion Deficit!
One can see how big a problem the federal spending has become. All Americans will fill some pain through cost cutting and tariffs but the costs will be severe if we don’t do anything. As the debt rises, so does the interest and soon there will be no money left for anything else. Bankruptcy.
I will spare the effects of the US defaulting on a debt payment on this post.
