We wanted to put together a high level thread explaining what's going on with the federal deficit and impending debt…

We wanted to put together a high level thread explaining what's going on with the federal deficit and impending debt spiral we're facing without major reform. We needed the @DOGE a decade ago and it's the only thing that can save this country from financial disaster. A long 🧵 but important.

Let’s break down the significant aspects of the U.S. federal budget for Fiscal Year 2024 (FY 2024) in terms anyone can understand:

Federal Budget Size: •Total Spending: In FY 2024, the U.S. government spent a total of around $6.5 trillion. That’s like spending $20,000 per second, every second, for the entire year. This money goes towards everything from defense, Social Security, healthcare (like Medicare and Medicaid), to education, infrastructure, and countless other programs and services.

The Deficit: •What’s a Deficit? A budget deficit occurs when the government spends more money than it earns in revenue. For FY 2024, the deficit was about $1.8 trillion. Imagine if you only made $4.9 trillion (the revenue) but spent $6.5 trillion; you’d be $1.6 trillion in the hole, which is essentially what happened with the federal government. •Why Does the Deficit Matter? A large deficit means the government needs to borrow money to cover its costs, which increases the national debt.

Interest on the Debt: •Interest Payments: In FY 2024, the U.S. spent approximately $950 billion just on interest for the national debt. This is like paying $30,000 every second in interest alone. It’s the second or third largest line item in the budget, only behind or close to Social Security and defense spending. •How It Works: Just like how you might pay interest on a loan or credit card, the U.S. government pays interest on the money it has borrowed. With a debt level of roughly $35 trillion at the end of 2024, even small interest rates can lead to enormous payments.

The Debt Spiral: •Borrowing to Pay Interest: Here’s where it gets trickier. When the government can’t cover its costs, including interest on the existing debt, with current revenue, it borrows more money. This borrowing increases the national debt. Now, with more debt, there’s more interest to pay the next year, which might require even more borrowing if revenues don’t increase or spending doesn’t decrease, leading to what’s called a “debt spiral.”

•A Larger Portion of Revenue Goes to Interest: More of the federal revenue each year has to go towards paying interest rather than funding new initiatives or maintaining existing programs. •Less Flexibility: High debt levels can restrict the government’s ability to respond to new economic challenges or emergencies because so much of the budget is already allocated to debt servicing. •Economic Risks: If interest rates rise, the cost of servicing the debt could increase even more, potentially crowding out other spending or forcing more borrowing. High debt levels can also lead to concerns about the country’s creditworthiness, potentially increasing borrowing costs.

Current Scenario: •The U.S. has been running large deficits for years, especially highlighted by the economic responses to global events like pandemics. While economic growth can help manage this debt by increasing revenues, without significant policy changes (like spending cuts or tax increases), this debt spiral could continue.

Edit - $6.5T is ≈ $200,000 per second

A VERY significant portion, around 13%, of every tax dollar you give the government is paid toward the interest for funds THEY borrowed . And that % grows everyday. Debt Spiral.