It is arguably the biggest political issue facing our nation, but not a single candidate with a chance of winning an election is talking about it on the campaign trail.
According to the latest Congressional Budget Office report, the federal government’s budget deficit reached almost $2 trillion in fiscal 2026. This is a problem that makes homes and cars harder to afford, raises the cost of financing a business, and threatens to slow wage growth for working families. And that is before you get to the even bigger concern that, at some point, America may not be able to pay its debts.
The $1.993 trillion deficit was 12% higher than in 2025 and the highest since the pandemic-era $2.8 trillion in 2021. Normally, deficits come down after emergencies or recessions, but six years into this latest economic expansion, these deficits have persisted, inflicting economic hardship on the most vulnerable people and weakening our ability to meet future challenges. Something must change, and fast.
Democrats say deficits are caused by too little revenue, but this is not so. Spending, which Democrats encourage, is much the bigger problem.
Between 2005 and 2025, government revenue grew by 47% after adjusting for inflation, nearly keeping pace with the economy’s 50% growth. Meanwhile, government spending exploded by 72%, rising from roughly $4.1 trillion in 2025 dollars to $7.0 trillion.
When pressed on spending, Democrats blame the Pentagon. But defense spending fell from 3.9% of gross domestic product in 2005 to 3.0% in 2025, while total federal spending rose from 19.3% to 23.1%. Washington is spending substantially more overall today than it did in 2005 while devoting a smaller share to defense.
What is driving federal deficits is runaway spending on retirement benefits and healthcare.
Between 2005 and 2025, Social Security spending rose by 83% after inflation, from $863 billion to nearly $1.6 trillion. Medicare spending roughly doubled from $492 billion to $992 billion, while federal Medicaid spending increased by 122%, from $301 billion to $668 billion, with all figures expressed in 2025 dollars. All three programs grew substantially faster than the economy.
Unfortunately, there has been a bipartisan aversion to tackling Social Security. President Donald Trump has promised not to touch it, while Sens. Bernie Sanders (I-VT) and Elizabeth Warren (D-MA) have proposed increasing benefits by $2,400 per year, financed through higher taxes on young Americans.
The record on Medicare is only slightly better. The Trump administration has taken useful steps toward paying the same rate for the same service regardless of where it is delivered, negotiating lower prescription drug prices, and cracking down on Medicare Advantage overpayments. These reforms can save taxpayers money without cutting guaranteed benefits. But Congress must build on that progress to bring the program’s spending growth under control.
Trump and the Republican Congress took real action on Medicaid with the One Big Beautiful Bill Act, tightening eligibility checks, imposing work requirements on certain able-bodied adults, and restricting financing arrangements that let states inflate federal payments. These changes would slow spending growth, but much of the savings will come in the future. Nationwide work requirements do not begin until January 2027, and the next Congress could weaken or repeal the reforms before savings materialize.
While retirement and healthcare have been the long-term drivers of current deficits, net interest payments on debt have shot up recently and now make up the second-largest spending item, behind only Social Security. Net interest costs have more than quadrupled in a decade, rising from $241 billion in fiscal 2016 to more than $1.1 trillion in fiscal 2026.
Deficit cutting is not discussed by this year’s campaigns because it is a vote-loser, but not cutting deficits is an emergency and a nation-loser. Social Security is approaching insolvency, and it must be central to the 2028 elections. Its retirement trust fund is projected to run dry in 2032, during the next president’s term, forcing Congress to confront choices it has avoided for decades.
Candidates should explain how they would restore solvency without simply authorizing more borrowing. Voters deserve a plan before the election, not another promise to leave everything untouched until the money runs out.