The Massive Fiscal Deception of the United States

 

The Massive Fiscal Deception of the United States

by Germanico Vaca

According to the Congressional Budget Office (CBO), the federal budget deficit for fiscal year 2025 is projected at $1.9 trillion. After adjusting for timing shifts in payments, the deficit allegedly rises to $2.0 trillion in 2025 and is projected to reach $2.8 trillion by 2034. Under these same adjustments, deficits are said to equal 7.0 percent of GDP in 2025, decline temporarily to 5.5 percent by 2027 as revenues outpace outlays, and then climb again to 6.9 percent of GDP by 2034—nearly double the 50-year historical average of 3.7 percent.

These numbers are presented as a serious fiscal analysis. In reality, they are deeply misleading.

The fundamental problem is not merely optimism bias or political spin. The problem is that the entire accounting framework is structurally dishonest. The figures cited by the CBO reflect only federal on-budget accounting, while systematically excluding vast portions of what constitutes the real national debt of the United States.

What Is Conveniently Excluded from “National Debt”

We are repeatedly told that U.S. debt stands at approximately $38 trillion, or about 134 percent of GDP, and that this ratio—while high—is still manageable. This narrative is a fiction.

True national debt is not limited to Treasury securities issued by the federal government. A serious accounting of national indebtedness must include:

• State, county, and municipal debt

• Student loan debt

• Mortgage and household debt

• Commercial and corporate debt

• Medicare and Medicaid obligations

• Social Security liabilities

• Federal pension obligations

• Military and veterans’ benefits

• Other unfunded and underfunded liabilities

When these obligations are considered—even conservatively—the real debt burden of the United States is multiple times larger than what is officially reported. Yet policymakers and the public are expected to treat federal-only debt figures as meaningful indicators of fiscal reality. This is not just inaccurate; it is absurd.

The Debt Service Spiral

The federal government is currently running deficits of approximately $300+ billion per month. Interest payments alone now exceed $1.1 trillion annually, and those costs are accelerating as debt rolls over at higher interest rates.

Meanwhile, foreign ownership of U.S. debt is declining, as fewer countries are willing to finance America’s deficits indefinitely. This trend is rarely emphasized, but it is critical: declining external demand for U.S. debt means higher interest costs, greater monetization pressure, and reduced fiscal flexibility.

Outlays, Revenues, and the Illusion of Control

CBO projections state that federal outlays in 2025 will total $7.8 trillion (28.9 percent of GDP), rising to nearly 30 percent of GDP by 2034 due primarily to aging-related programs and rising interest costs. Revenues are projected at $5.3 trillion (17.2 percent of GDP), rising modestly after the scheduled expiration of portions of the 2017 Tax Cuts and Jobs Act.

But once again, these projections rest on partial accounting.

They fail to fully incorporate:

• The accelerating growth of Social Security beneficiaries

• The explosion in Medicare and Medicaid costs

• Changes in unfunded liabilities

• Demographic deterioration

• Productivity stagnation

• The compounding effects of repeated tax cuts favoring high-income earners

When interest costs alone consume over $1 trillion per year, and primary deficits continue to expand, claims of fiscal sustainability collapse under even minimal scrutiny.

Legislative “Adjustments” That Make the Numbers Worse

CBO now admits that its current projections show deficits $400 billion larger for 2025 than previously estimated, and cumulative deficits from 2026–2034 that are $3.1 trillion higher than earlier projections. Much of this increase stems from newly enacted legislation, including emergency supplemental appropriations for Ukraine, Israel, and the Indo-Pacific—spending that, by law, is assumed to continue indefinitely.

Yet even these revised projections still exclude the full reality of entitlement growth and unfunded liabilities. When massive tax cuts for the wealthy are combined with permanent emergency spending, exploding interest costs, and ignored structural obligations, the resulting projections are not forecasts—they are fabrications.

Conclusion: This Is Not Economics, It Is Narrative Management

The United States is not facing a “challenging but manageable” fiscal outlook. It is facing a systemic debt crisis masked by selective accounting.

By excluding the majority of real obligations from official debt figures, the government creates fictitious numbers that allow policymakers to delay reform, expand spending, and maintain the illusion of control. This is not a failure of forecasting—it is a failure of honesty.

No serious nation would assess its financial condition by ignoring most of its liabilities. The fact that the United States does so is not a sign of strength, but of institutional decay.