U.S. Debt & Deficits

The U.S. national debt now totals a staggering $36.6 trillion dollars. That equals $107,000 of debt for each U.S. citizen (yes, even newborn babies) and it amounts to nearly $323,000 per U.S. taxpayer. If you need a visual aid, Perplexity AI says that $36.6 trillion dollars would wrap around the Earth’s equator a mind-blowing 142,473 times! Not only is this level of debt unsustainable, but it’s also hard to understand how this has not already crushed the U.S. economy. It is a ticking time bomb that needs to be defused as quickly as possible.

The national debt can't be reduced without controlling government spending and eliminating budget deficits, which have been consistent since 1970 (except for 1998-2001 under Clinton). The debt is the cumulative result of all deficits and surpluses since 1791 when federal finances started to be tracked after the Revolutionary War. Generating surpluses is crucial to reducing the national debt, which is the main force behind a balanced budget amendment. The return of Presidential line-item veto power could aid in this effort, but that's a topic for another day.

When U.S. consumers have debt and budget problems, they either increase income, cut expenses, or sell assets. The same actions can, and should, be taken to reduce the U.S. debt and deficits. First, the government should increase income / revenues. In our view, this is best accomplished with the measured use of tariffs (i.e. reciprocal tariffs vs. punitive tariffs) combined with individual and corporate tax cuts to drive more consumer spending and encourage increased business investment. After the 2018 Tax Cuts and Jobs Act (“TCJA”), individual tax revenues reached a record high $2.6 trillion in 2022 – 66% higher than before the TCJA was passed. Also, corporate tax revenues reached a record high $425 billion in 2022 – 43% higher than before TCJA.

Second, the U.S. government must cut expenses. The government budget deficit was $1.8 trillion in fiscal year 2024, which was preceded by a FY 2023 budget deficit of $1.7 trillion and a FY 2022 budget deficit of $1.4 trillion. Love it or hate it, the goals of the Department of Government Efficiency (“DOGE”) is to slash federal spending, reduce inefficiencies, and find cost savings. According to the website www.usdebtclock.org, DOGE has generated $234.7 billion in annual federal cost savings thus far. Although this represents only $2,089 per taxpayer, DOGE has only been in operation for 2.5 months and is projected to find nearly $1 trillion in annual cost savings by July 2026.

Lastly, the U.S. government should sell assets and rid itself of the administrative overhead related to maintaining those assets. For starters, the government could sell a portion of the 640 million acres of land it owns across the U.S. (28% of our nation’s total land area). At an average value of $4,800 / acre according to www.acres.com, this U.S. owned land is worth just over $3 trillion. It’s also managed by large government agencies that could be trimmed: Bureau of Land Management (244 million acres / 10,000 employees); US Fish and Wildlife Service (89 million acres / 8,000 employees); National Park Service (80 million acres / 18,000 employees); and the US Forest Service (193 million acres / 28,000 employees). With the sustained combination of increased revenues, expense cuts, and asset sales, the U.S. government should be able to eliminate annual budget deficits and make a meaningful reduction in the U.S. national debt. But does Congress have the political will to do so during the next 4 years?