In a post-midnight vote along party lines, bleary-eyed Republican members of Congress passed a tax-and-spend bill that will define Americas fiscal reality for decades. In their rush to strike a deal by Independence Day, GOP lawmakers reassembled the architecture of federal finance in ways that lock the United States into a Sisyphean future where balancing the budget will become a political impossibility.
The true danger of this legislation lies not in its size or any single provision, but in how its jigsaw pieces fit tightly together to leave future policymakers without good options. Far from setting priorities for a single fiscal year, the bill constructs a framework that narrows the choices so severely that restoring fiscal balance will require massive bipartisan compromises that Republicans and Democrats on Capitol Hill have all but forgotten how to effectuate.
Congressional Budget Office
The federal government now spends some $6.5 trillion a year, but the majority of that spending is not discretionary. About 65% of federal outlays go to three entitlement programs: Social Security, Medicare, and Medicaid. These programs move forward on autopilot, growing steadily as the population ages and health care costs rise. The recent bill leaves this growth trajectory entirely intact and contains no structural reforms or efforts to bend the cost curve.
The 15% of spending devoted to defense and national security was not just preserved; it was fortified with new modernization funds. The Pentagon is now on track to hit $1 trillion in annual spending within the next few years.
Debt service consumes another 15% of federal outlays – roughly $1 trillion a year. This spending buys nothing: no new infrastructure, no educational programs, no national security. It is simply the cost of carrying a debt burden that has surpassed $36 trillion.
That leaves just 5% of federal spending for everything else – infrastructure, scientific research, education, national parks, environmental protection – the discretionary programs that dominate political debates but represent a small and shrinking portion of actual spending.
Moreoever, the trajectory of interest payments is a worsening concern. Debt service has grown from $200 billion in 2010 to $1 trillion today, making it the fastest-growing part of the federal budget. But context matters: The U.S. economy has grown substantially over that period, and interest payments as a share of GDP and federal revenues, while rising, are not at levels that signal an immediate crisis.
This dynamic helps explain why President Trump – and now any future president overseeing this fiscal structure – is so tempted to pressure the Federal Reserve to keep interest rates low. A 1-point decrease in the federal funds rate would save the government upwards of $300 billion per year in interest payments – more than the totality of federal education spending. In a budget defined by locked-in expenses and shrinking flexibility, rate cuts remain one of the few levers left to reduce immediate fiscal pressure.
But relying on rate cuts is a temporary salve that masks a deeper problem: a debt so large that small changes in borrowing costs have enormous consequences.
In the meantime, Washington is making matters worse. On the revenue side, the most notable feature of the “Big Beautiful Bill” is its expansion of the standard deduction to nearly $30,000 for married couples. This simplifies tax filing for millions of Americans, but it also further narrows the pool of taxpayers contributing to federal revenues. Today, about 60% of households already pay no federal income tax. That figure could climb closer to 70%, meaning roughly three in ten American households will shoulder the entire burden of income tax receipts.
Whats left is a narrow slice of upper-middle-class professionals – engineers, doctors, small business owners, and managers – who bear a disproportionate share of federal income taxes. These taxpayers earn their money through salaries that are fully exposed to tax, but they lack access to the wealth-shielding strategies available to the ultra-rich.
The deeper story of this budget bill is the way it locks elements into place with almost surgical precision. Entitlement spending is growing on autopilot and still seems to be politically untouchable. Defense spending is expanding. Debt service is rising. Discretionary spending has been squeezed to its smallest share of the budget in modern U.S. history. And meanwhile, the tax base has narrowed, concentrating the burden on a shrinking, politically exposed, and economically fragile segment of the population.
This structure does constrain future governance, but its not guaranteed to produce crisis. Rather, it ensures that future choices will require careful balancing of priorities, growth strategies, and revenue reforms. Democrats must face the unsustainable growth of entitlements. Republicans must align against a tax code rigged to protect the wealthiest. Both sides must admit that kicking the can down the road has led us to the edge of Niagara Falls.
The path forward demands real reform, not political theater. Because if we dont fix it together, it will break on its own – and take trust in government down with it.
To paraphrase Abraham Lincoln, “A fiscal house divided against itself cannot stand.”
Eric Spitz is the CEO of Rootz.ai, a marketing analytics start-up company that converts retail transaction data into AI-ready formats. He was previously chairman of Freedom Communications, including the Orange County Register. The opinions expressed in this commentary are his own.
