Why are we in so much debt?
I’ll try to make this post as by-partisan as I can. You’ll notice that the data in this post is from 2000-2025. It doesn’t discuss who was president, or who was in control of congress. We can state fairly that both Democrats and Republicans have shared power over the past 25 years.
Every few years, Congress declares a crisis, opens the spigot, and promises the spending is temporary. The recession ends. The pandemic passes. The disaster recovery wraps up. And yet, when you look at the federal budget a few years later, spending rarely returns to where it started. It simply resets at a higher level and resumes climbing from there.
This isn’t a partisan observation — it’s a pattern that shows up clearly in the data, and it has a name.
The data tells the story
Federal spending has grown from $1.79 trillion in 2000 to $7.01 trillion in 2025 — roughly a 292% increase in nominal terms. Even after stripping out inflation, spending in 2025 is more than double what the 2000 baseline would predict if spending had simply tracked the cost of living ($3.34 trillion inflation-adjusted vs. $7.01 trillion actual).
The clearest inflection points aren’t gradual drift — they’re crisis spikes that never fully recede:
| Period | What Happened | Spending Trend |
|---|---|---|
| 2008–2009 | Financial crisis, TARP, stimulus (ARRA) | Jumped from $2.98T to $3.52T — and never dropped back below $3.4T |
| 2020–2021 | COVID-19, CARES Act, American Rescue Plan | Jumped from $4.4T to $6.55T, then $6.82T |
| 2022–2025 | “Post-pandemic” era, emergencies declared over | Spending never returned below $6.1T |
That last line is the important one. The public health emergency ended in 2023. The CARES Act programs wound down. Unemployment supplements expired. And yet spending in 2023–2025 has stayed at $6.1–7.0 trillion — roughly 40–50% above the pre-pandemic 2019 level of $4.4 trillion, with no emergency left to justify it.
As a share of the economy, the same pattern holds. Federal spending sat in a narrow 17.6–20.9% of GDP band for two full decades (2000–2019). It spiked to 31.3% of GDP in 2020. By 2025 it has only partially retreated to 23.4% of GDP — still nearly four points above the pre-pandemic norm, even though GDP itself grew by nearly $9 trillion over that time.
This has a name: the ratchet effect
Economists Alan Peacock and Jack Wiseman first documented this pattern in a 1961 study of UK public spending, and economic historian Robert Higgs generalized it in his 1987 book Crisis and Leviathan. Their observation: government spending doesn’t grow in a smooth line. It grows in a stair-step — a sharp jump during a crisis, followed by a partial retreat that never fully returns to the starting point. Higgs called this the “ratchet effect” — two steps forward, one step back, forever.
The mechanism isn’t complicated. Emergency spending creates:
- New programs and agencies that develop their own constituencies, staff, and advocates once they exist
- New spending baselines — because continuing resolutions and the next year’s budget process typically start from last year’s number, not a fresh accounting of need
- New political normalcy — what was “emergency” spending in year one is simply “the budget” by year three, and cutting it now reads as an active cut rather than a return to normal
Continuing resolutions: the mechanism that locks in the ratchet
This is where the process of federal budgeting compounds the problem. Congress is constitutionally responsible for passing 12 separate appropriations bills before each fiscal year begins on October 1. In practice, this rarely happens. The Bipartisan Policy Center notes that not a single appropriations bill has been enacted on time since 2009 — and full, on-time passage of all 12 bills hasn’t happened since the late 1990s.
Instead, Congress increasingly governs by continuing resolution (CR) — stopgap legislation that simply extends last year’s funding levels for weeks or months at a time while lawmakers negotiate. This has real consequences for the ratchet:
- A CR locks agencies into the prior year’s spending baseline, including whatever emergency or supplemental funding was layered on top of it. There’s no mechanism inside a CR to ask “does this emergency still exist?” — it just extends the number.
- Because CRs are negotiated under shutdown deadline pressure, they tend to be blunt extensions, not line-by-line reviews. It’s far easier to extend a number than to renegotiate it downward.
- The 2025 fiscal year alone saw this play out at the extreme: a CR through December 2024, a “full-year CR” through September 2025, and then a 43-day government shutdown starting October 1, 2025 — the longest full shutdown in U.S. history — before a revised funding bill finally passed in November 2025.
Supplemental appropriations compound the effect from the other direction. These are the “emergency” bills passed outside the normal 12-bill process — for disaster relief, war funding, or pandemic response. They’re designed to be one-time and temporary. But because the regular appropriations process so rarely produces a clean, reviewed budget, supplementals increasingly become a backdoor way to permanently raise the spending baseline: once a program is funded via supplemental for two or three years running, it gets folded into the “current services” baseline that the next continuing resolution extends.
The result is a one-way ratchet with two teeth: the crisis provides the initial jump, and the CR/supplemental cycle removes the mechanism that would otherwise force spending back down to a deliberately reviewed, justified level.
The uncomfortable question
None of this means every dollar of pandemic-era or crisis spending was wasteful, or that the underlying emergencies weren’t real. TARP likely prevented a deeper financial collapse. CARES Act and pandemic relief kept households and businesses afloat during an unprecedented shutdown of the economy.
But the data raises a fair question that gets less attention than it deserves: if the crisis is over, why hasn’t the spending gone back? Two full years after the last COVID-era relief program formally expired, federal spending remains at levels that, adjusted for inflation, are roughly double what the pre-2000 growth trend would have produced. That’s not emergency spending anymore. That’s just the new baseline — quietly locked in, one continuing resolution at a time.