The Brutal Arithmetic of the Budget Deficit

Right now, U.S. citizens are paying $2.4 trillion for their government. That’s what federal revenue added up to this year, according to the Congressional Budget Office. Some 46 percent of that total comes from individual income taxes, 35 percent from payroll taxes meant for Social Security and Medicare, 10 percent from corporate income taxes, and the last 9 percent from estate and gift taxes, excise taxes, and others.

Now consider the $1.1 trillion which, also according to the CBO, the government will borrow by year’s end to make up the difference between revenue and expenditures. That’s the budget deficit, and if there was one thing the presidential candidates agreed on during the campaign, it was this: The deficit is unignorable. Mitt Romney said the gap needs to be closed entirely through spending cuts. Obama has maintained that increased revenue—i.e., increased taxes—must be part of the solution. Neither pronouncement sufficiently conveys how painful plugging the budget hole will be.