The Congressional Budget Office (CBO) reported that federal revenue in July was $50 billion higher than expected, crediting President Donald Trump’s One Big Beautiful Bill for the increase. The additional revenue is a positive sign for the economy, but even unexpectedly strong receipts are not enough to solve the federal government’s fiscal dilemma.
Spending remains the underlying problem. Yet neither political party has demonstrated the willingness to make the difficult choices necessary to change course. Lasting fiscal reform may therefore require structural restraints that force Congress to do what it has been unwilling to do on its own.
So far in Fiscal Year 2026, the federal deficit is $1.8 trillion, which includes a $432 billion deficit in July, accruing at roughly $14 billion per day. “The United States has borrowed more in the first 10 months of fiscal year 2026 than it did in all of fiscal year 2025,” stated Maya MacGuineas, President of the Committee for a Responsible Federal Budget. “Today’s Treasury figures show we’re already $1.8 trillion in the red, suggesting we’re on track to borrow over $2 trillion this fiscal year.”
A $40 Trillion Warning
The $40 trillion national debt demonstrates the magnitude of Washington’s spending problem and presents serious economic and national security concerns.
To put the significance of $40 trillion in debt into perspective, it took more than 190 years to accumulate the first trillion dollars in federal debt. Now, it has taken only five months to generate the most recent trillion. By 2029, the national debt is projected to escalate to $50 trillion.
The sheer size of the debt is alarming, but the consequences are not merely numbers on a government balance sheet. “Excessive debt slows economic growth, reduces income levels, raises interest rates, and constrains funding for core government functions, like national defense,” stated Romina Boccia, Director of Budget and Entitlement Policy at the Cato Institute.
Interest payments on the debt alone represent the fastest-growing area within the federal budget. They are projected to hit $1 trillion in fiscal year 2026, surpassing both Medicare and defense spending. This equates to more than $3 billion a day.
As interest costs consume a larger portion of the federal budget, Washington will have fewer options for addressing national defense, entitlement programs, and other legitimate responsibilities of the federal government.
Washington’s Bipartisan Spending Problem
If the consequences are so serious, why hasn’t Washington changed course? The uncomfortable answer is that neither political party has demonstrated a sustained willingness to confront federal spending.
It appears that both political parties remain numb to the spending and debt crisis. President Trump began his second term pledging to reduce spending through DOGE, but those efforts have failed to fundamentally alter Washington’s fiscal trajectory. DOGE is becoming a distant memory and another example of a futile attempt to rein in spending as a result of the inaction of Congress.
Meanwhile, The Wall Street Journal has reported that President Trump is now asking Congress to continue spending, especially with his call for $1.5 trillion in new defense funding. If Republicans are advocating for more military spending, Democrats are arguing for additional spending on domestic programs. The combination of spending on “guns and butter” will continue.
Further, while candidates across the nation are campaigning, very few are actually advocating for spending cuts. “It’s campaign season, America, and the checkbooks are out,” wrote Damian Paletta of The Wall Street Journal. Paletta continued, “What’s not popular (members of both parties have found), is campaigning on cutting stuff.”
That political reality gets to the heart of Washington’s spending problem. Nearly everyone can identify wasteful spending in the abstract. Far fewer policymakers are willing to eliminate specific programs, benefits, or subsidies when doing so carries a political cost.
Senator Rand Paul remains a “voice in the wilderness” when it comes to sounding the alarm over the national spending and debt crisis. “We shouldn’t be spending $432 billion – that we don’t have – in a single month,” stated Senator Paul. “It’s time for Washington to get serious about its spending problem, reduce the size and scope of government, end welfare benefits for illegal aliens, and crack down on rampant fraud.”
He also warned that Congress is preparing to spend still more, “After the August recess, Congress is gearing up to pass another spending bill that will bankroll fraud, welfare, and industry bailouts. All while our national debt inches closer to $40 trillion.”
Congress Needs Guardrails
Decades of evidence suggest that simply asking Congress to spend less is not enough. The political incentives that produced today’s deficits will continue regardless of which party controls Washington. That is why structural fiscal rules, such as spending limits and a balanced budget requirement, are necessary. Such rules would not dictate every spending decision, but they would establish boundaries and force lawmakers to set priorities rather than continually rely on additional borrowing.
David Stanley, ITR Foundation’s founder, championed constitutional spending limits at both the state and federal levels, referring to them as essential taxpayer protections. “My experience in the legislature convinced me that government operates like a kind of giant credit card, where everyone thinks they can charge whatever they want, and that there is simply no way that government can be expected to control taxes and spending on its own without being forced to do it by constitutional amendments,” stated Stanley.
As the national debt surpasses $40 trillion, Stanley’s warning is increasingly relevant. Washington’s fiscal problem is not a lack of revenue, but Congress’s inability to restrain spending. If policymakers will not impose that discipline themselves, taxpayers should insist on rules that will.
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