Fifteen years ago, when the Barack Obama–Joe Biden ticket first got elected, America’s three highest federal deficits on record, in inflation-adjusted dollars, were all from World War II. Since then, however, annual deficits have surpassed World War II levels an amazing 12 times, bumping wartime deficits down to 13th, 14th, and 15th in the record books. Incredibly, it has become routine for the federal government to rack up higher annual deficits—even after adjusting for inflation—than it did while the U.S. was fighting a two-front war against Nazi Germany and Imperial Japan.

In 2020—under President Donald Trump, a Democratic House, and a Republican Senate—the nation’s inflation-adjusted deficit more than quadrupled any deficit during World War II. In fact, the 2020 deficit was higher than the combined deficits across all four years of World War II. In 2020, for every $10 in tax revenue that came in, $19 in spending went out.

Now, after a profligate 2021 and 2022, the books have closed on 2023. (Deficits are measured in fiscal years, which end on September 30.) The newly completed fiscal year (FY) ranks as the sixth-highest inflation-adjusted deficit on record, more than doubling the tally from 1945—the highest deficit during World War II. In 2023, for every $10 that came in, nearly $14 went out.

FY 2023 would rank even worse, if not for the Supreme Court’s striking down, as a violation of federal law, President Biden’s decree that roughly $400 billion in student loans would be forgiven—or, rather, would have their obligations shifted to taxpayers. The Congressional Budget Office (CBO) says that without that judicial decision, the 2023 deficit would be several hundred billion dollars higher, which would vault it to third on the list of highest real (inflation-adjusted) deficits.

Even if one assumes that deficits should rise as the population rises, recent deficits are a thing to behold. In real per-capita dollars (adjusting for both inflation and population growth), the nation’s three highest deficits have been 2020, 2021, and 2009. The 2023 deficit ranks eighth on that list; it would be fourth without the Court’s decision.

In addition to the 2023 deficit, Biden has presided over the seventh-worst inflation-adjusted deficit on record (2022). And he also bumped up the deficit in 2021—a year that would normally count toward Trump’s tally—by 13 figures (before adjusting for inflation), as he spearheaded and signed into law additional Covid-19 “stimulus” spending, $1.12 trillion of which, according to the CBO, was spent in that year. (Without adjusting for inflation, the past four deficits have all landed in the top five spots in the record books, ranging from $3.13 trillion in 2020 to $1.38 trillion in 2022, with 2023 coming in third place, at $1.70 trillion.)

The American Main Street Initiative (which I run) has published a chart showing the 20 worst deficits on record, along with the president in office at that time, based on tallies from the White House Office of Management and Budget and the CBO. To put recent deficits into further context, the average inflation-adjusted deficit from the end of World War II through the 1970s was less than one-tenth as high as the average World War II deficit. In relation to the size of the U.S. population, these postwar deficits through the 1970s were even lower.

The American Main Street Initiative’s chart also shows inflation-adjusted tax revenues. These demonstrate that the government spends too much; it doesn’t tax too little. The three years in which the federal government has collected the most tax revenue, even after adjusting for inflation, are 2022 (first place), 2021 (second place), and 2023 (third place). Indeed, in 2023 the federal government collected six times as much tax revenue as it did in 1945—yet it still managed to rack up more than twice the deficit. That’s because it spent four times as much as it spent while fighting a two-front world war. And all of this is after adjusting for inflation.

What is the government spending the money on? Well, about 70 percent of spending, consuming about 90 percent of tax revenues, now goes toward autopilot programs funded via “mandatory” spending. This is spending that Congress doesn’t even vote to approve, or appropriate, on an annual basis. And the part of this that has increased most is for federal health-care programs. From the time that Medicare and Medicaid spending first visibly hit the books (in 1967) through 2020, the federal government spent a combined $17.8 trillion on those two programs, while combined federal deficits over that same span amounted to $17.9 trillion.

As I’ve maintained elsewhere, if we had a Mount Rushmore of debt, Lyndon Johnson—who spearheaded those Great Society programs’ passage and signed them into law—would merit George Washington’s place of honor, as he’s the father of our debt. The other three spots should be filled by Obama, Trump, and Biden. The nation has racked up more deficit spending, and more debt held by the public, on those three presidents’ watch, than under the 42 previous presidents combined—again, after adjusting for inflation. Put otherwise, we’ve racked up more inflation-adjusted deficit spending in the 14 years since the Obama–Biden ticket first took office in 2009 than we did during the 220 years before they took office.

Johnson and the Congress that passed the Great Society programs did so with no idea how to pay for them. While the Social Security payroll tax funds Social Security, payroll taxes cover only about a third of Medicare’s costs and none of Medicaid’s. When people say that Social Security will run out of money in about a dozen years, what they mean is that it will stop being fully funded by revenues received from payroll taxes and will have to dip, at first only slightly, into general revenues. That would still be a far cry from having two-thirds (like Medicare’s) or all (like Medicaid’s) of its funding be taken from general revenues.

Social Security, however, shouldn’t be made to dip into general revenues at all, as this could be avoided by sensibly raising the eligibility age by a few years for those not already in, or about to enter, the program. After all, the percentage of the U.S. population over age 75 is now roughly the same as the percentage that was over age 65 when Social Security first began. Yet the eligibility age for receiving full benefits has been raised by only two years (from 65 to 67) over eight decades. This shouldn’t be a heavy political lift, though you wouldn’t know it judging by the platforms of both parties’ presidential candidates.

The far heavier lift—of responsibly dealing with out-of-control federal health-care programs—seems beyond current presidential candidates’ current contemplations. But without sensible reforms such as both parties flirted with in the late 1990s under the leadership of Newt Gingrich, Medicare’s malfunctioning autopilot will soon fly itself into the ground.

The Treasury Department just estimated that net interest payments on the debt in FY 2024 will be $839 billion. Based on Treasury’s estimates, that will eat up the first 17 percent of tax revenue that the federal government collects. In other words, for every six dollars that you pay in federal taxes, the first dollar won’t actually go to buy anything. If not for the nation’s colossal debt, you could have merely paid 83 percent as much in taxes and the government would still have had just as much money to spend on defense, highways, national parks, and the like. And this wasted part of your tax contribution is growing by the year.

As Thomas Jefferson put it when describing government actions that lead to “misery” and “suffering,” the “fore horse of this frightful team is public debt. Taxation follows that, and in its train wretchedness and oppression.” Debt is a choice; we choose it at our peril.

Photo by Jemal Countess/Getty Images for the Peter G. Peterson Foundation


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