In Recognition of Tax Day: Why Congress Avoids the Hardest Math in Washington

With most Americans recently submitting their income tax filings, it’s an opportune time to review where exactly those tax dollars go in the federal budget these days. 

Spoiler: It’s mostly going to our entitlement programs, Social Security, Medicare and Medicaid. But what should also be alarming is how much tax revenue is being used at this point just to pay interest on the national debt. 

According to data compiled by the Peter G. Peterson Foundation, in the most recent fiscal year’s $7 trillion federal budget, Social Security was the largest single line item and comprised 22% of federal spending. Medicare, the other usual suspect for nondiscretionary domestic spending, consumed 14% of the budget. 

Defense spending is split into two line items: discretionary (13%) and nondiscretionary (14%). Only combined do they overtake Social Security as a share of the budget. The nondiscretionary spending is primarily for earned military benefits, such as pensions, while the discretionary spending includes items such as ships, aircraft and salaries for active duty personnel. 

As for what the federal government is now spending on interest to pay off the accruing debt? It was also 14% of the budget—and growing. 

For perspective, the U.S. Treasury currently pays an average of $2.8 billion per day just for interest. On our current path, that figure will rise to $5.9 billion per day by 2036. 

Despite a midterm election in Georgia this November that features all 14 congressional seats (including three without an incumbent) and a U.S. Senate race, the national debt is seemingly absent from campaign narratives. 

This matters because the deficit has direct consequences for our daily lives. As the debt grows, the government must issue more Treasury bonds to fund it. To attract buyers for this mountain of debt, interest rates for key consumer-lending benchmarks, such as the 10-year Treasury, must remain high. 

One local impact of this can be seen in housing affordability: Continued borrowing by the federal government effectively keeps mortgage rates elevated, which is another factor making homeownership harder in an era of already tight supply. The same principle also applies to rates for credit cards and auto loans. 

Unfortunately, so much of what is driving the debt requires significant—and difficult—structural change. 

In February, the Wall Street Journal profiled Alan Cole, a 37-year-old tax economist with the Tax Foundation who bet his life savings, over $340,000, on the prediction market Kalshi against Elon Musk and DOGE being able to cut federal spending. 

He wasn’t betting against their ability to cut “waste, fraud and abuse” or shrink the size of the federal workforce. Instead, Cole recognized that there wasn’t enough discretionary spending, such as cutting wasteful contracts or relocating federal offices outside of D.C. to sites with a lower cost of living, that could possibly offset the 46% of mandatory entitlement spending that comes just from Social Security, Medicare and Medicaid and continues to grow rapidly. 

As the Journal observed, “The U.S. government has been described as an insurance company with an army. Now, with federal debt nearing 100% of gross domestic product, it’s an insurance company with an army and a giant mortgage. The forces driving spending ever upward—inflation, an aging population, healthcare costs and interest payments—can’t change quickly.”

Congress often avoids this conversation because the political blowback is immediate and the math is unforgiving. Yet, ignoring the structural reality doesn’t make the debt go away; it only ensures that when the adjustment finally happens, it will be thrust upon us by external forces that make reforms much more painful. That math will be even more unforgiving.

Thus, U.S. fiscal policy has now reached a point where entitlement spending and the rising floor of debt interest have made willful ignorance the default position. This has also effectively locked us into a cycle where the interest on our past spending will increasingly consume the resources needed for future investment.

Meaningful change requires a difficult, bipartisan consensus: one which acknowledges the current path is mathematically unsustainable, regardless of which party controls the levers of government. 

It wasn’t that long ago when some members of Congress were referred to as “deficit hawks.” But that label now seems as rare as a Blue Dog Democrat or a New England Republican. 

For some time now, the default line has been that the national debt will be something “passed on to our grandchildren.” But if our current deficit spending continues, that future may arrive even sooner than expected.