Ultimately, citizens pay for the state deficit, although the dispersion of costs makes this invisible at first glance. The deficit drives up interest rates and thus loan installments, fuels inflation—which acts as a hidden tax—and threatens higher taxes and a decline in the value of savings, both in the US and in Poland.
Why the state deficit permeates the lives of ordinary people
A budget deficit is a situation where the state spends more than it collects. This seems abstract because we operate with numbers so large that they are hard to imagine. Yet the deficit slowly, but consistently, affects the daily lives of families. It impacts store prices, loan installments, the value of savings, taxes, and the stability of the currency. When the state lives on credit, citizens begin to pay for it in a dispersed manner, often invisible at first glance.
It is therefore worth looking at the deficit not as a political slogan, but as an economic phenomenon that permeates our wallets. Especially since both the United States and Poland currently face record debt levels and a record scale of promises made to citizens.
| USA | Poland | |
|---|---|---|
| Deficit (2027 forecasts) | approx. $1.6 trillion, 5.2% of GDP | over PLN 282 billion, approx. 7.1% of GDP |
| What drives it | cost of debt servicing, election promises | social programs, defense (close to 5% of GDP) |
| What you feel in your wallet | more expensive loans, inflation | weaker zloty, inflationary pressure |
USA: A deficit that has become a permanent feature of the landscape
In the United States, the federal deficit has grown to proportions that seemed unthinkable even a decade ago. According to official projections by the Congressional Budget Office (CBO), the US budget deficit in fiscal year 2027 will be approximately $1.6 trillion, or 5.2 percent of GDP. This will be significantly above the historical average (3.7%).
The cost of servicing the debt is one of the largest federal expenditures. This means that a huge portion of taxpayer money is not allocated to schools, roads, or security, but to paying interest. In practice, this translates into higher interest rates, because the government, by borrowing such large amounts, competes with households and businesses for the same capital. Mortgages become more expensive, credit card payments rise, and businesses pay more to finance investments.
American “pork barrel politics”
In the US, campaign promises also come with a price tag. In recent years, proposals have emerged to expand Social Security without identifying funding sources, cancel a portion of student loans, provide massive subsidies for energy, fuel, or healthcare, and introduce tax cuts that increase the deficit unless accompanied by spending cuts.
Each of these promises sounds attractive, but if not covered by real revenue, it goes onto the public debt bill. And sooner or later, citizens pay that bill.
Poland: Deficit in the shadow of defense spending, social programs, and election promises
Poland also faces the challenge of a growing deficit. The budget draft for 2027 projects a deficit exceeding PLN 282 billion, which is about 7.1 percent of GDP. This is well above the EU limit of 3 percent, which is why Poland is under an excessive deficit procedure. At the same time, the country is allocating record funds to defense—close to 5 percent of GDP, the highest in all of NATO.
This article comes from the 2027 Polish Pages book.
Polish election promises: 500+, 800+, 13th and 14th pensions
In Poland, the deficit is largely driven by extensive social programs. The 500+ transformed into 800+, the 13th and 14th pensions, coal subsidies, mortgage holidays, protection allowances—all of these are real money paid out of the budget. Each of these programs has its beneficiaries and its social justification, but combined they represent a huge burden on public finances.
Politicians, regardless of their political affiliation, are eager to promise additional benefits because they are easy to communicate and immediately felt by voters. The problem is that they are rarely accompanied by information on where this money is supposed to come from. And if it does not come from taxes, it comes from debt. And debt must be repaid, which only fuels the debt spiral.
How do the American and Polish deficits affect our wallets?
- Loans and installments. In the US and Poland, the state’s growing borrowing needs drive up interest rates. A family that could afford to buy a home a few years ago often has to choose a smaller property today or postpone their plans. In the US, the average mortgage payment has increased by several hundred dollars a month. In Poland—by several hundred zlotys.
- Prices and inflation. Inflation acts as a hidden tax. When the state finances its spending through credit and the economy cannot absorb the additional demand, prices rise faster than incomes. In the US, this is visible in the costs of food, services, and housing. In Poland—in the prices of energy, food, and municipal services.
- Taxes and fees. A high deficit means that in the future the government will either have to cut spending or increase revenue. In the US, the discussion about reforming Social Security and Medicare returns regularly. In Poland, there is increasingly talk of the need for changes in the tax system, the elimination of deductions, or raising certain rates.
- Savings and pensions. High inflation and a weaker currency lower the real value of money kept in accounts. In the US, this means that a dollar buys less than a few years ago. In Poland—that the zloty is more susceptible to fluctuations, which drives up the prices of imported products.
Reckless promises and the real price we pay
Election promises have one thing in common: they are immediate, concrete, and pleasant. Their cost—deferred, dispersed, and invisible. Politicians make promises because they know voters like quick benefits. However, they rarely mention that every promise has a price.
In the US, the price is higher interest rates, inflation, and the growing cost of federal debt. In Poland—a weaker zloty, inflationary pressure, and the necessity to fund benefits that become more expensive year by year.
Why is it worth understanding the deficit?
Because the deficit is not just numbers in the state budget. It is a signal of what our financial future will look like: whether loans will be more expensive, whether taxes will rise, whether our savings will retain their value, and whether the state will be able to finance public services. It is also a lesson in responsibility—both for those in power and for us as we plan our own budgets.
Elżbieta Baumgartner is the author of many guidebook books, including “Estate Planning, or How to Get Your Affairs in Order in the US and Poland” and “How to Hide Money from the Taxman.” They are available in electronic format on the Poradnik Sukces website: www.PoradnikSukces.com, [email protected], phone 1-718-224-3492.
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The materials are for informational purposes and do not constitute legal, tax, financial, or medical advice. In matters concerning a specific situation, it is worth consulting a specialist. The authors and publisher are not responsible for the consequences of using this information.
