Congressional Budget Office

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Washington ignores America's fiscal cliff

Illustration: Lindsey Bailey/Axios

The United States faces a dire and unsustainable fiscal outlook. You'd never know it from the action in Washington, Axios chief economic correspondent Neil Irwin writes. Across parties and policy areas, you'd never guess that the U.S. faces fiscal constraints created by its high-and-rising debt, ballooning deficits without precedent in times of prosperity, and a looming entitlement spending crisis when the Social Security trust fund runs out. State of play: Consider recent policy developments that will meaningfully make the fiscal picture worse. President Trump is seeking $200 billion to fund the Iran war and replenish depleted weaponry. The Supreme Court struck down the use of emergency authority to impose tariffs, and legal battles are underway over refunds. For all the attention on DOGE last year, there's little evidence of lasting restraint of federal spending. Zoom in: That all follows tax legislation enacted last year, scored by the Congressional Budget Office as increasing cumulative deficits by $3.4 trillion over a decade, with backloaded spending cuts smaller than combined tax cuts. Even if Democrats regain power, some lawmakers are emphasizing possible further tax cuts. Sens. Chris Van Hollen (D-Md.) and Cory Booker (D-N.J.) have proposed cutting taxes on middle- and upper-middle-class households. 🧮 By the numbers: The CBO projects deficits of around 6% of GDP each year for the next decade — numbers that predate the Iran war or Supreme Court tariff ruling. Other than in recent years, deficits of that scale have only been seen in times of economic crisis or major war. Those same CBO projections have the public debt soaring to 120% of GDP by 2036, up from about 100% now. The all-time record for federal debt was 106% of GDP, reached during World War II. Social Security could run out of funds in 2032, resulting in a politically toxic cut in payouts if Congress can't agree to extend benefits. The bottom line: America's fiscal health is miserable. Nobody in Washington is acting like it.