What Will Happen To The Deficit In 2025? | Global News Avenue

Forecasters say the federal spending deficit is almost certain to rise in 2025 as President-elect Donald Trump is widely expected to cut taxes, but delivering on campaign promises of deep spending cuts will be more difficult.

Expert observers say the government has always spent more than it collects, and the outcome of the November election means the gap (deficit) is likely to widen in 2025. Since Republicans won control of the White House and Congress, they could implement most policies Trump’s economic agendaincluding tax cuts that reduce federal revenue.

Trump has promised to cut the deficit by lowering spending and raising tariffs on foreign products, but economists say those measures are unlikely to offset his tax cuts.

In August, economists at the Wharton School of the University of Pennsylvania’s Budget Model estimated that Trump’s major economic policies would increase the deficit by $185 billion in 2025 and as much as $5.8 trillion over 10 years. These include extending the 2017 tax cut and excluding Social Security benefits from federal income taxes.

Trump has proposed further tax cutsincluding exempting overtime pay, veterans and police officers from paying income taxes, further driving up the deficit.

Some economists are alarmed by the size of the deficit

Deficits are not unusual for governments – they have occurred every year since 2001. However, the ever-expanding national debt of $36 trillion has sounded the alarm to economists. More and more warnings Debt begins to pose a risk to the financial system. With today’s high interest rates, debt is becoming increasingly burdensome for government budgets: Last year, the federal government pay more interest More money than is spent on defense.

Some economists say high-deficit policies can benefit household budgets by lowering taxes, but they also have the potential to stoke inflation and push up the cost of living.

To make up for the tax cuts, Trump promised to cut spending and even appointed billionaires Elon Musk and Vivek Ramaswamy to a committee called the Department of Government Efficiency to find ways to save money, including Remove regulations.

However, since two-thirds of the federal budget goes to payments mandated by law, such as Social Security and Medicare benefits and interest on the national debt, DOGE has an uphill battle.

“Deficit-increasing and/or growth-stimulating tax cuts will drive up inflation unless regulatory reforms significantly increase supply and lower costs, or Elon Musk and Vivek Ramaswamy and their Ministry of Government Efficiency ( DOGE) succeeded in slashing government spending,” Robert Fry, an independent forecaster, wrote in a commentary. “I wish them luck, but I’ll believe it when I see it.”