The Deficit Show: We Keep Watching, but Don’t Act 

Written by Matt Andrews
The third in a series of blog posts by Matt Andrews on U.S. federal debt and the capabilities needed for fiscal governance. 

Note: all images were generated using ChatGPT. 

In the previous post, I asked why the federal debt struggles to become a problem we act on together as a nation. I focused on Marshall Ganz’s familiar questions, Why this? Why us? Why now?  

Unfortunately, I suggested that each question runs into a different difficulty: 

• Why this? Reducing the deficit sounds appealing until it becomes a choice about a particular tax or program. People can picture the higher tax bill they might receive or the service they might lose. They can also picture what they would rather protect: retirement benefits, healthcare, defense, schools or infrastructure. General agreement that borrowing should fall does not tell us which of those commitments to change. 

• Why us? Responsibility is easy to place elsewhere. Politicians can blame another party or an earlier administration. Citizens can blame politicians while opposing changes to their own taxes or benefits. These accounts may each contain some truth, but they can leave everyone waiting for somebody else to act. 

• Why now? Action brings visible costs to people living and voting today. Continued borrowing postpones part of the bill. Its costs arrive gradually, through interest payments and reduced room for future choices, often in places that do not immediately look like part of the federal budget. There is nearly always a reason to say that this is the wrong moment to make a difficult change. 

In sum, the US debt situation sets us up with a fundamental tension. We can all see it, and have strong feelings about it. Sometimes its hard to look away. But looking and doing are two different things. 

A Reality TV Show? 

In reflecting on this, I have come to liken the situation to a reality television series, The Deficit Show.  

Imagine it showing a family struggling with its finances. Each episode, an expert sits them down and explains that their debts are growing faster than their income. The bills arrive. Family members argue about who spent the money, who failed to earn enough and who ought to give something up. Viewers take sides. Then comes the episode that promises to change everything. Someone announces a tough new budget. Someone else storms out. A cupboard is cleared, a subscription cancelled, perhaps a prized possession sold. It makes compelling television. We can see the conflict and the sacrifice. At the end of the episode, everyone says the family has finally faced its problem. 

The next season opens with another stack of bills. 

The comparison is uncomfortable because it captures something about how most Americans—including political leaders—seem to engage with the reality of federal finances. A debt-ceiling confrontation or a public spending cut commands attention. It offers characters, conflict and a moment that looks decisive. The less dramatic question—whether the government’s recurring commitments and revenues are coming into balance—receives far less attention. Different viewers applaud different interventions. When the annual accounts arrive, the underlying problem is still there. 

Where are we in the show? 

So where are we in the story? To start answering, let’s look at the most recent completed fiscal year, asking how much the federal government spent beyond its income, and what has happened to bills from prior seasons. If we titled the episode based on such data, we might call it, How exceptional borrowing has become a new normal. 

The current episode’s title derives from what I see in the figure below, which shows the federal deficit as a share of GDP since 1990: 

• In the latest completed episode—fiscal year 2025—the government collected about $5.23 trillion and spent about $7.01 trillion.  

• It borrowed the $1.78 trillion difference—approximately 5.8% of overall U.S. GDP. 

Those numbers are difficult to picture, so let’s widen the camera and allow a more textured comparison: 

• First, consider that the entire construction industry in the United States contributed roughly 4.4% of GDP, and the information industry (including tech) contributed about 5.5% of GDP. That means that the federal government borrowed more in one year than the construction and tech industries added (separately) to the economy.  

• Looking further afield, we can compare this to other countries. In an IMF-based ranking of national GDP for 2025, only 15 countries produced more in the entire year than the U.S. federal government borrowed in the same year. The US deficit was nearly as large as South Korea’s economy and larger than the annual output of Turkey, Indonesia, the Netherlands and Saudi Arabia. Note that I’m not saying the deficit was equal to these countries’ deficits; the deficit was equal to the size of the countries’ economies.  

It is also useful to reflect on how the current instalment of this deficit show compares with past seasons, especially recognizing that the US has seen deficits above 5% before. This happened in prior seasons that were characterized by dramatic events, however, with the deficit jumping above 5% during the financial crisis in 2009 and again during the pandemic in 2020 (for instance).  

But the plot seems to have changed since 2020. The Covid emergency has passed, but borrowing continues as a norm and not an exception. We see this in that the deficit exceeded 5% of GDP in all six fiscal years from 2020 through 2025. This happened in just five years between 1947 and 2019.   

The advance preview of future seasons offers little reassurance. The Congressional Budget Office (CBO) projects deficits of at least 5.6% of GDP every year from 2026 through 2036.  

If that forecast holds, the run of deficits above 5% of GDP will last 17 consecutive years. Future decisions could change the projection. But CBO is not assuming a decade of recession to produce these figures: it expects unemployment to remain below 5% throughout the period. Borrowing at a level once associated with emergencies has become the expected result under ordinary conditions.  

These figures would make a startling reveal at the end of any television episode. Yet we have seen so many reveals that another large number may hold our attention only until the next scene. We tend to be more captivated by the tension of conflict. 

Episodes that captivate us 

Two recent episodes had all the ingredients needed for great viewing: recognizable characters, high stakes, public confrontation and a moment that looked decisive. Different viewers cheered at different points. The test, though, came after the cameras moved on. What changed in the accounts? 

The showdown 

In 2023, the deficit story became a suspense episode. The United States had reached its debt ceiling. The Treasury used temporary measures to keep paying the government’s bills, while President Biden and House Speaker Kevin McCarthy faced a deadline. Each meeting brought another round of cameras and commentary. Would they make a deal? Would the United States default?  

The confrontation made compelling television. Biden and McCarthy disagreed over whether spending cuts should be a condition of raising the debt ceiling. Viewers could follow the arguments, count the days, and choose a side. It was harder to see that the debt ceiling concerned payment of obligations already incurred. Avoiding default would keep the family paying its bills; it would not, by itself, balance spending and income.  

The negotiations produced the Fiscal Responsibility Act. It suspended the debt ceiling and capped some discretionary spending for two years. The Congressional Budget Office estimated that the agreement would reduce projected deficits by about $1.5 trillion over 2024–2033, relative to its earlier baseline. This was a real change in the expected borrowing path. It was also a ten-year estimate, not a plan to balance the annual budget.  

Then came the familiar reality-TV ending: the confrontation was resolved, the principal characters claimed their victories, and attention moved on. The quieter question—what did the deal actually do to the family’s finances?—received much less attention than the fight itself.  

When the next annual accounts arrived, the fiscal year 2024 deficit was about $1.8 trillion, roughly $138 billion higher than in 2023. That increase does not mean the agreement failed: the deficit might have been larger without it. It does mean the deal addressed only part of the imbalance. We watched the showdown closely. We paid less attention to the result. The family was still spending far more than it brought in. 

The chainsaw 

The next season gave the show a prop. In February 2025, Elon Musk walked onto a conference stage holding a chainsaw given to him by Argentina’s President Javier Milei. The crowd cheered. Here was a promise to cut government that could be understood in a single image.  

The scenes that followed were just as vivid. The Trump administration moved to dismantle parts of the federal government, like the U.S. Agency for International Development. Foreign aid contracts were terminated; employees cleared their desks. To some, this looked like overdue action against wasteful spending. To others, including aid workers and organizations whose programs stopped, it was deeply alarming. People watched the same episode and saw either a government finally willing to make cuts or one destroying work it did not understand.  

The conflict held our attention on news sites. But the question for this series is what happened to the deficit. A cut can be enormous for the people who depend on a program and still be small relative to the federal budget.  

Reuters examined spending at agencies affected during the early DOGE period and found about $19 billion less spending—roughly 0.5% of total federal outlays over the comparison period.  When the fiscal year 2025 accounts arrived, the deficit was still high—at $1.78 trillion—the current 5.8% of GDP.  

The debt-ceiling showdown and the chainsaw drew different audiences and different reactions. Both involved decisions with real effects. Yet in each case, the most watchable question was who would win the confrontation? The less watchable question came afterward: Did recurring revenue and spending move into a relationship the country can sustain?  

Reality television gives us a new conflict each episode. Fiscal governance requires us to keep looking when the drama is over. 

The bill arriving between episodes 

While we watch the confrontations, another part of the story advances with little drama. Every year, the interest bill arrives. It is the cost of borrowing undertaken in earlier episodes, and it must be paid alongside everything the government wants to do now. 

In 2025, federal net interest cost $970 billion—about $2.66 billion a day. That exceeded the $917 billion spent on the national defense budget function. Interest claimed 18.5 cents of every dollar the federal government collected.  

Fiscal year	Net interest	Interest per $1 of federal revenue
2015	About $223 billion	6.9¢
2025	About $970 billion	18.5¢

This is more than four times the annual interest bill of a decade earlier, in current dollars. The share of revenue going to interest has grown from about seven cents to more than eighteen cents per dollar. Those are two views of the same pressure: the bill has grown, and paying it takes a much larger portion of what the government collects. 

This is money raised today to pay for yesterday’s borrowing. An interest payment does not renew a road, support a new discovery or prepare a community for the next disaster. Congress can still choose to fund those things, but it must do so while meeting the interest bill. If revenue does not cover both, the government has to borrow again, adding to the bills future budgets will face. 

The scene is easy to miss because nothing visibly closes when an interest payment is made. There is no showdown, no chainsaw and no crowd to cheer or protest. The payment simply goes out. Yet each year it leaves less of today’s revenue available for tomorrow’s needs. 

Where the Deficit Show now leaves us 

The showdowns have subsided in our ongoing Deficit Show, and the chainsaw scene is long gone. But the country’s accounts are still open, and the latest figures tell us where the story stands. In 2025, the federal government borrowed roughly one quarter of what it spent, paid more in net interest than it spent on national defense, spent about $805 billion more than it collected (before paying interest), and incurred debt exceeding 5% of US GDP.  

The current episode sits uncomfortably in the overall series: The federal government deficit has exceeded this 5% level of GDP in all six years since 2020—having surpassed the level only five times between 1947 and 2019. The Congressional Budget Office expects deficits above 5% of GDP every year through 2036. What was exceptional is now normal. 

These are the realities that remain after the dramatic scenes we all watch on live TV, and that we will have to pay attention to at some point. Yet the attention is still lacking, ostensibly because the show offers other entertainment: follow the confrontation, cheer or condemn the intervention, then wait for the next shocking figure.  

We know how to be an audience. We have been less willing to ask what it would take to change the family’s finances. That is the unsettling thing about The Deficit Show. We keep watching, but do not act. Every year we watch becomes part of the next year’s bill. 

In the next post, I will look at recent experience in other countries where similar shows have unfolded. Their experiences cannot tell us exactly what will happen in America. They can, however, show what happens when fiscal room narrows without any treatment—and why it matters to make choices to change while those choices still remain.