National Debt and Fiscal Deficits are Dire and Critical

The current U.S. National Debt is over $35 trillion and growing.

To pay for annual fiscal budget deficit, the federal government borrows money by selling Treasury bonds, bills, and other securities. The national debt is the accumulation of this borrowing along with associated interest owed to the investors who purchased these securities.

U.S. Annual Federal Tax revenue or receipts are approximately $5 trillion. 

U.S. federal tax revenue is made up of the total tax receipts received by the government each year. Most of it is paid either through income taxes or payroll taxes. The rest is made up of estate taxes, excise and customs duties, and interest on the Federal Reserve’s holdings of U.S. Treasuries.

The U.S. government estimates its total revenue to be $5.49 trillion for fiscal year 2025.

Per the White House’s projections, income taxes are slated to contribute $2.6 trillion. Another $2.2 trillion should come from payroll taxes. This includes $1.3 trillion for Social Security, $399 billion for Medicare, and $56 billion for unemployment insurance. Corporate taxes would add another $467 billion.

U.S. Annual Fiscal Deficit is running approximately $2 trillion. 

A fiscal deficit occurs when the federal government’s spending exceeds its revenues. The federal government has spent $1.83 trillion more than it has collected in fiscal year (FY) 2024.

To pay for government programs while operating under a deficit, the federal government borrows money by selling U.S. Treasury bonds, bills, and other securities. The national debt is the accumulation of this borrowing along with associated interest owed to investors who purchased these securities.

National Debt to Gross Domestic Product (GDP) is currently 120%, according to St. Louis Federal Reserve. 

The debt-to-GDP ratio compares a country’s sovereign debt to its total economic output for the year. Its output is measured by gross domestic product (GDP).

U.S. Government Revenue (or Tax receipts) per GDP is 29%.

How much national debt is too much and is there a tipping point at which it becomes a big problem for a country?

One way to gauge the size of a country’s national debt is to compare it with the size of its economy—the ratio of debt to GDP. (GDP serves as a measure of an economy’s overall size and health, measuring the total market value of all of a country’s goods and services produced in a given year.)

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