Your Share of the National Debt is ... $105,000

The big picture: The U.S. federal deficit for fiscal year 2024 hit a staggering $1.8 trillion, according to the Congressional Budget Office (CBO). This marks an increase driven largely by higher interest costs, Social Security, and Medicare expenses—putting the country's financial stability under scrutiny. While it’s easy to feel detached from these big numbers, should you be concerned?

Why it matters:

The federal deficit isn’t just an abstract figure. It’s a sign that the government is spending much more than it’s bringing in through taxes, which can have ripple effects on economic growth, inflation, and even future tax policies. Unlike previous times of high deficits—such as during wars or economic crises—today’s deficit is growing during a period of low unemployment and solid growth, making it more concerning.

Key factors contributing to the deficit:

- Social Security and Medicare: These two major entitlement programs saw a 6% increase in costs from last year, with spending expected to rise even further as the population ages.

- Interest payments: The U.S. paid $950 billion in interest on its debt—34% higher than the previous year—mainly due to rising interest rates. This surpasses military spending and represents a significant chunk of federal outlays.

- Tax collection quirks: While revenue climbed 11%, some of that was due to unusual factors like deferred tax payments from disaster-hit areas in California.

What does it mean for you?

Every American’s share of the national debt now stands at approximately $105,000. This isn’t a direct bill anyone has to pay, but it illustrates the growing burden on future generations and the risk of higher taxes or reduced government services down the line if nothing changes.

The politics:

Both major-party presidential candidates are proposing tax and spending plans that could add trillions more to the deficit over the next decade. Donald Trump’s proposals focus on tax cuts, which analysts estimate could increase deficits by $7.5 trillion over 10 years. Kamala Harris is advocating for expanding Medicare and maintaining Social Security benefits, but her policies are projected to add $3.5 trillion to the deficit.

What experts say:

Economists are divided. Some argue that persistent deficits and growing debt are manageable and don’t pose an immediate crisis. Others warn that the current path is “unsustainable” and could limit the government’s ability to respond to future emergencies or fund new initiatives.

Should you care?

Here’s why you might want to keep an eye on it:

- Rising interest costs: As the government borrows more to cover its deficit, interest payments grow, potentially crowding out spending on essential services like education and infrastructure.

- Long-term economic risks: A higher debt burden can lead to lower economic growth in the long run, making it harder for future generations to prosper.

- Tax implications: More debt today could mean higher taxes tomorrow, especially if interest costs continue to climb.

What’s next?

Whoever wins the next election will face tough decisions about spending levels, expiring tax cuts, and the debt ceiling. Both parties talk about reducing the deficit, but bipartisan agreement on how to do so has been elusive. Without addressing major cost drivers like Social Security and Medicare, the deficit is likely to continue growing.

With each American’s share of the national debt now at $105,000, do you think the U.S. should focus on reducing its debt, or are there more immediate concerns that need attention?