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WASHINGTON: Donald Trump returned to the White House promising to get the United States\u2019 financial house in order by slashing the scope of the federal government, ending costly \u201cforever wars\u201d and spurring economic growth to tame spiraling deficits.<\/strong><\/p>\n Instead, the national debt has surged past $40 trillion in the first 19 \u200bmonths of his second term. Federal spending has grown, not shrunk. The six-month-old Iran war has become an expensive stalemate. And the cost of servicing the U.S. debt, meanwhile, has grown as yields on some U.S. bonds \u200chit their highest levels in nearly two decades.<\/span><\/p>\n The result, budget experts say, is a looming fiscal crunch likely to force Congress and a future president to take politically unpopular steps to either raise taxes or trim the social safety net, potentially including Social Security.<\/span><\/p>\n \u201cThere is no scenario in which one could look at the record of President Trump in both this term and the previous term, and declare it a fiscal success,\u201d said Maya MacGuineas, president of the Committee for a Responsible Federal Budget, a centrist Washington think tank. \u201cThe way we got here was not his fault, but the fact that \u200bwe are here and lawmakers have not done anything to improve it is all of their fault, with the president clearly being central and creating the agenda.\u201d<\/span><\/p>\n The debt surpassed $40 trillion just ahead of the upcoming November midterm elections that will \u200bdetermine if Republicans keep control of Congress for the second half of Trump\u2019s final term. While voters may not focus on the issue until the country\u2019s fiscal problems translate into benefit \u2060cuts or tax hikes, the fallout hits them just the same in the form of high mortgage interest rates that track yields on government debt and inflation outpacing wage hikes.<\/span><\/p>\n Trump has driven up spending across his two terms. His first-term tax cuts \u200badded $8.4 trillion in debt, according to the Committee for a Responsible Federal Budget. His second-term tax and immigration law added another $4.7 trillion, according to the Congressional Budget Office, lawmakers\u2019 nonpartisan bookkeeper.<\/span><\/p>\n White House spokesman Kush Desai said Trump was the \u201cfirst president to seriously take on pervasive \u200bwaste, fraud, and abuse across the federal government,\u201d and cut spending by firing thousands of federal workers and eliminating \u201cwasteful programs.\u201d<\/span><\/p>\n Trump and congressional Republicans did shrink the annual deficit in 2025, but by a marginal amount, even as the overall debt continued to grow.<\/span><\/p>\n Both parties share responsibility. Tax cuts under Republican presidents Ronald Reagan and George W. Bush widened deficits, as did Bush-era wars. Democrats Barack Obama and Joe Biden increased spending through stimulus packages after the 2008 financial crisis and COVID-19 pandemic, respectively. President Bill Clinton, a Democrat, posted modest annual surpluses in his second term \u200bduring a period of strong economic growth and reforms to entitlement programs in compromise legislation with a Republican-controlled Congress.<\/span><\/p>\n Demographic shifts have also strained the budget. As the \u201cbaby boom\u201d generation born in the years after World War Two retires, the trust funds behind Social Security \u200band Medicare are running thin and payroll tax revenue falls short of covering future benefits.<\/span><\/p>\n Previous generations of Republicans have called for overhauling entitlements, but Trump has led his party to buck conservative orthodoxy, creating new safety-net-style programs such as government-backed investment accounts for newborns.<\/span><\/p>\n His administration has shifted the U.S. \u200crevenue structure, in \u2060part by raising tariffs and cutting corporate tax rates, further toward taxing workers and households and away from businesses and investors. It has made government revenue more dependent on a type of taxation that commands a shrinking portion of economic output amid global financial shifts and a rapidly retiring workforce. And it has tilted tax burdens increasingly toward low- and middle-income households over the highest earners, according to congressional budget officials.<\/span><\/p>\n \u201cYou now have Republicans becoming very fond of alternative ways of raising more taxes to avoid politically difficult entitlement reforms,\u201d said Romina Boccia, director of budget and entitlement policy at the conservative Cato Institute.<\/span><\/p>\n Conservatives have long held that lower tax rates and less government oversight spur investment and growth, generating more tax revenue and easing the cost of antipoverty programs and \u200boutpacing the debt, a strategy reiterated by Trump.<\/span><\/p>\n \u201cThe growth will take \u200bcare of that very easily,\u201d Trump said en route \u2060to a political rally on August 21. From the Oval Office on Monday, he said his policies could increase the country\u2019s economic output to 20% annually, a feat accomplished only once since 1947, as the economy roared back to life in the third quarter of 2020 when COVID-19 shutdowns ended.<\/span><\/p>\n His optimism clashed with the message of Federal Reserve Chair Kevin Warsh on Monday at the G20 \u200bfinance ministers\u2019 meeting in North Carolina. The current record level of investment flowing to AI and big technology firms, Warsh said, indicates a shortage of capital and is forcing governments and \u200bthe companies leading the AI investment \u2060boom to compete for the next investment dollar, driving up rates and making the government\u2019s financing problems worse.<\/span><\/p>\n Trump during the campaign said tax cuts would pair with generational spending reductions, and he commissioned Elon Musk to lead the now-defunct U.S. Department of Government Efficiency.<\/span><\/p>\n Musk pledged to cut $2 trillion from the budget. The agency ultimately reported $110 billion in savings, a figure the Government Accountability Office said relied on overstated or unverifiable claims, opens new tab. The White House did not respond to a request for comment about the findings.<\/span><\/p>\n \u201cIt\u2019s not that you can\u2019t cut taxes. You can, but you \u2060have to pair \u200bthat with spending cuts, and they haven\u2019t been,\u201d MacGuineas said.<\/span><\/p>\n Current and former administration officials say the White House is not getting enough credit for economic advances \u200band maneuvers to ease consumer prices \u2014 things they say will improve the country\u2019s fiscal standing. But William Emmons, the former system vice president of the Federal Reserve Bank of St. Louis, said Trump\u2019s policies have deepened an already challenging fiscal condition.<\/span><\/p>\nMOUNTING DEBT<\/span><\/h2>\n
DECADES OF DEFICIT EXPANSION<\/span><\/h2>\n
COUNTING ON GROWTH<\/span><\/h2>\n