Solving Ballooning National Debt & Deficit Spending

Potential Solutions

At the end of 2024, the USA had a national debt of $35.5 Trillion, which is 118.3% of 2024 Gross Domestic Product (GDP).  This situation has been created by 4 major issues/policies since the year 2000: 1) 911 Attack on New York City for which we initiated the Iraq & Afghanistan wars; 2) 2008 major recession caused by financial de-regulation policy; 3) COVID-19 epidemic and its impact on our economy; and 4) major tax cuts in the 2017 tax bill.  It is not unusual for countries to be in this situation when crisis’s hit.  We were over 100% of GDP at the end of WWII, but the question is – what are we doing about it?

To put this in the language of family finances, the national debt is equivalent to how much the total of your loan balances you carry relative to your annual income.  For instance, your family may have a current debt total of $200K (home mortgage plus car loan) with an annual income of $100K, or 200% of your income.  In both the government and family situations, the ability to pay back that debt determines what interest you are charged to maintain that debt – as debt increases, so does the percentage increase – adding to the debt burden.  This issue is why some families declare bankruptcy, which is not an option for the federal government.

The issue of the USA national debt and its related annual deficits (annual government expenses exceed government income) is a major political issue that has been argued about since 2001 when President Clinton handed a balanced budget and annual government surpluses (government income above government expenses) to President GW Bush.  At that time our USA debt was over $5 Trillion but only 55% of our GDP.

Since 2015 the Office of Management and Budget has cautioned Congress that “the federal government continues to face an unsustainable long-term fiscal path” because our debt is growing faster than our GDP.  OMB has a target goal of 98% debt to GDP.

To add to the seriousness of this situation, at the end of 2024 the USA also has a future obligation for Veteran and Federal Employee benefits payable of $15 Trillion.  We cannot keep putting our children’s future at risk due to poor financial management by Congress and the Presidency.

And the Trump administration just passed it’s budget bill that will add $3.4 Trillion to our debt by 2034.

To solve this major policy issue impacting our children’s futures, here’s are a few ideas that could solve the problem:

• Since Social Security income nearly matches Social Security outlays, just adjust its program in each budget so it remains balanced.  Benefits could be cut, or taxes increased. There is a proposal to lift the cap on income (currently at $168K) and collect FICA taxes on all the income of all Americans, including the very wealthy.  Another option is to delay the age at which you can start Social Security payments (currently at 62 years of age, could be raised to 64).  
• Challenge “sacred cows” in our budget – Medicare/Medicaid, but also Defense.  Healthcare costs in this country are 2 to 3 times higher than what other countries pay.  We should ask “Why are our healthcare costs so high?”  “How do we lower our healthcare costs without degrading care?” We should also ask “Why are we increasing spending to $933 Billion on Defense when we are not at war?” “Why do we have nearly a million people in the military when drones seem increasingly effective without risking our soldiers’ lives?”
• Require the US Congress and the President to reduce deficits in their annual budget as well as raise revenue if the current percent of GDP debt is above the 98% goal.
• Withhold Congress’ salaries until Congress delivers a budget that meets the goal.  In other words, make them do their job or they don’t get paid. We can’t be under constant fear of a government shutdown.  
• Don’t elect or re-elect fiscally irresponsible people of either party to Congress.  
• For new programs, require any bill to also identifies the source(s) of revenue to pay for it. That’s how families balance their budgets.

Join In.  Suggest solutions.

What do you think?  What could solve our debt/deficit spending in the United States?  Remember, comments must stay on topic and not be defamatory of anyone.  Solutions to problems is what this UNSTUCK Blog seeks.

Additional information is provided below to guide this discussion – Current Situation, Historical and Constitutional context.  

Current Situation

The 2^nd Trump administration just passed H.R. 1 on July 1st, 2025 which projects that this budget will add another $3.4 Trillion debt during the budgetary period 2025-2034. To see the text of the bill, go to https://www.cbo.gov/publication/61537

In summary, the bill is consistent with Republican policies:

• Increased spending on Defense, Administration of Justice, Natural Resources (oil), Community & Regional Development, Transportation, and General/Science &Technology. Increasing outlays by $90 Billion
• Decreased spending on International Affairs, Energy (EV and solar credits), Education but also surprisingly on Commerce and Agriculture.
• Decreases in individual income taxes and corporate income taxes by extending the 2017 Tax Bill and adding additional tax credits (no tax on tips, etc). Decreasing revenues by $20 Billion.

The top four expense areas which account for 75% of this federal budget are:

• #1 – Health (primarily Medicare/Medicaid) $1.9 Trillion (offset by about $500 Billion income from employment taxes (FICA) taken out of worker’s paychecks)
• #2 – Social Security $1.6 Trillion (offset by $1.5 Trillion in income from employment taxes (FICA) taken out of worker’s paychecks)
• #3 – Net Interest on the National Debt $1 Trillion
• #4 – Defense – $933 Billion

To put this in perspective, if you zeroed out the other 25% of the budget (which isn’t possible), the USA would still have an annual deficit of $500 Billion in this budget!

History

Since its inception, the USA has periodically had deficits and national debt – starting with the Revolutionary War through today.  That isn’t new.  What is new is the “no more new taxes” campaign which started in the ‘70s and the debt ceiling battles of recent years when Congress shuts down government (or threatens to) rather than reach consensus or compromise on our budget.

In recent years Congress has passed the Financial Officers act of 1990 (CFO Act) and the Fiscal Responsibilities Act of 2023 attempting to improve the government’s financial responsibility. Progress has been made on audit comments since 2023, but today the Department of Defense still had 28 audit comments of the 52 US government wide.  The Government Accountability Office (GAO) stated there are “serious financial management problems at the Department of Defense (DOD).”

The USA government has struggled to keep up with computer technology and many of these problems are due to the governments’ continued use of antiquated systems.  

US Constitution

The Constitution of the United States clearly puts the responsibility for our budgets (revenue and payment of debts authorized by law) squarely on the shoulders of our Congress.  The President’s role is to either sign and approve budget bills or veto them.  If vetoed, a bill requires 2/3^rd votes in Congress to over-ride the President’s veto.

“All Bills for raising Revenue shall originate in the House of Representatives; but the Senate may propose or concur with amendments as on other Bills.” – Article I, Section 7.

“The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defense and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States; To borrow Money on the credit of the United States; To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;” – Article I, Section 8

“The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.” – Fourteenth Amendment to the US Constitution