Richard Rubin, Anthony DeBarros and Rosie Ettenheim:
Take a spin in the time machine, back to an era when the federal budget deficit didn’t look like a problem at all.
In 2000, the federal government actually ran a surplus and the Congressional Budget Office, Capitol Hill’s nonpartisan scorekeeper, projected the Treasury would keep collecting enough revenue to pay for all government programs and generate continuing surpluses.
Fast-forward to 2025, and the U.S. is running record deficits outside of wars, recessions or crises. The nation’s publicly held debt is nearing 100% of gross domestic product and is projected to surpass the post World War II record of 106% in a few years.
What happened?
It wasn’t a single event but a mix of factors: an aging population, tax cuts, wars, the 2008 financial crisis, expanded healthcare spending, the Covid-19 pandemic and rising federal assistance to households. Both parties played a part. Democrats did little to reverse that tide of red ink when they controlled Congress and Joe Biden was president. Now, Republicans and President Trump are pushing a tax-and-spending megabill that would add trillions to deficits, compared with letting tax cuts expire as scheduled.
Here’s a look at how we got here. The solid black line is reality. The dotted lines are CBO’s moment-in-time forecasts of a future that never happened.
Wages and salaries for gov’t workers are 23.6% higher than their private sector counterparts, but the real difference in cost of employment is benefits, which are a whopping 82.2% higher for gov’t workers:
