Government Debt: It Doesn't Matter Until It Matters

The U.S. federal government will soon have a budget that reaches $5 trillion. It will also soon spend roughly $3 trillion on mandatory programs such as Social Security and Medicare. This leaves about $2 trillion in spending, but a substantial portion of that is net interest on the debt. The remaining 30 percent is the whole government. Everything you associate with government, from courts, to defense, to regulatory agencies to various welfare programs, all falls within that 30 percent of the budget.

The year 2020 is an outlier because of the coronavirus pandemic, but the deficit could run over $1 trillion for years. Put another way, deficits will likely be 65 percent of discretionary spending at a minimum next year. In some years, like this one or when there is a recession, the entirely of the actual government will be funded by deficit spending.