Don’t let numbers set the strategy but do run the numbers against the strategy to make sure the strategy makes sense and is sustainable. Iterate to optimize the strategy.

Looking, first, at the federal numbers (year to September 30, 2019):

The federal government:

• spent $1.28 for every $1 collected (in 2019), adding $0.28 to the national debt.
• Has made an implied promise, in the shape of Social Security and Medicare for a growing number of retiring baby boomers – which means, all other items being equal, expenditure will need to increase to about $1.50 for every $1 of tax collected, by 2030.

The 2019 number was an extraordinarily high federal deficit in a year of peace and economic prosperity: and it is expected to get higher: a lot higher in COVID-19 impacted fiscals 2020 and 2021, but then (because of the Social Security and Medicare promise) perennially high deficits through 2030 and beyond.

Unless something is done about it.

This from the Congressional Budget Office (CBO) in its most recent (Sept 22, 2020) long term outlook:

Except in World War II, we are running the highest deficit in history – and we will soon surpass that: the difference is that the war was a temporary event, we are now dealing with something much more permanent – an imbalance in our finances, caused by: (1). a combination of past mismatch of promise made to Americans, and provision made by the federal government to meet that promise; (2) the aging of America; and, (3). increasing healthcare costs.

The CBO’s annual deficit projection, to produce this total debt picture is:

At September 30, 2020, the federal public indebtedness of the US was $65,000 per person, almost 100% of GDP. CBO forecasts the debt will rise to 195% of GDP by 2050: the US capacity for debt is large, it is not unlimited [How much can the US borrow?].

The 10 year outlook produced by the administration in February 2020 as part of its fiscal 2021 budget proposal shows a much rosier projection: but it is a work of fiction (mainly because it assumes a miraculous rate of economic growth, already hopelessly optimistic pre COVID-19, now ridiculous (but not yet updated) – a soggy, dishonest, document. The CBO (a bipartisan body) bases its forecast on assumptions that are by no means conservative, but are defensible.

Balancing priorities in the US