In April 2026, U.S. debt exceeded 100% of GDP or the economic output of the entire economy for the first time in over 80 years. Currently, the Congressional Budget Office, a non-partisan organization that provides economic information to Congress, projects that debt will reach 120% of GDP by 2036.
The concern is that the debt will keep growing. Once debt reaches 100%, it doesn’t become inherently worse. However, this growth reflects fiscal recklessness.
American politics has become poisoned by a reckless disregard for our fiscal future. In 2024, both Democrats and Republicans ruled out reductions to Social Security and pledged to cut taxes. These policies will perpetuate a crisis we have been sleepwalking into for decades. At a minimum, one party should take the fiscally smart but politically punishing position that the U.S. needs to balance its budget. This means spending must be cut.
What we’ve done
In the past 25 years, we have seen both parties engage in reckless spending. Though they may try to reduce the budget deficit or the difference between federal revenue and federal spending, neither party has really tried to eliminate it.
The problem has become very pronounced since 2017. The Tax Cuts and Jobs Act, the First Trump Administration’s attempt at an economic policy bill, was projected by the CBO in 2018 to increase the deficit, not the debt, by around $1.4 trillion over the next decade. Indeed, between 2017 and 2019, the deficit increased from $0.69 trillion to $0.98 trillion. That’s $2.43 trillion dollars in debt in just three years.
2020 and 2021 saw record-high spending and deficits, with the combined deficit for those years being $5.9 trillion dollars. Even if Covid justified the spending increase, an entirely defensible claim, spending has not yet returned to pre-Covid levels and does not seem set to. 2022 saw the lowest deficit since the pandemic at $1.39 trillion. If President Donald Trump has his way this year, the defense budget could balloon by another $500 billion. Other discretionary funding could be cut by $73 billion. Bluntly, the math doesn’t work. The federal debt would simply balloon even further.
What we can do
The real driver of national debt is not defense spending. In 2025, the government paid less on defense spending than on paying off the interest of the national debt. The real driver of this crisis is mandatory spending. Federal statutes set spending levels for Social Security, Medicare, Medicaid and other benefit programs and Congress must change the formulas to adjust them. This makes up around 60% of the budget. Paying interest on the national debt is another 14%.
If it’s not convincing that maintaining such a massive debt is a concern, 14% of the budget, or around $1 trillion, is devoted to preventing the debt from increasing off of interest payments. If the U.S. did not have to put that money toward servicing our interest, that money could go toward either doubling the size of the military, doubling the size of Medicare or massively increasing social security spending, just for a few examples.
This assumes the government could maintain current spending levels without debt. Unfortunately, that is not possible. It is precisely these high levels of spending that have created the debt crisis we have today.
Proposed Solutions
One popular proposal to solve our deficit problem is to tax billionaires. In 2026, a California labor union proposed a one-time tax of 5% of the net worth of all billionaires in California. Putting aside the legal issues with wealth taxes in the U.S., if this was implemented nationwide, it would raise $409.45 billion based on the estimates from the Institute on Taxation and Economic Policy, less than a quarter of the projected budget deficit for 2026.
Keep in mind that it is a tax on net worth, not income and so is not necessarily repeatable ad infinitum. Additionally, taxing net worth is fiscally problematic, as it includes stock holdings, the value of which can fluctuate rapidly. There are many other reasons a wealth tax would not solve our debt and deficit problem.
If we cannot tax the wealthy to get out of this hole, there is one reliable way to do so; cut spending. While tax increases could help offset some cuts, spending will have to come down. Admittedly, this path would be difficult. Almost 26% of the federal budget would have to be cut in order to balance the budget and start making modest payments on the debt. In the long run, lower interest payments will strengthen U.S. fiscal policy and free budget space for restored programs.
Bipartisan changes
Unfortunately, both parties are committed to a policy that will only balloon our debt further until the system cannot sustain it anymore. Unless and until Congress acts, the Social Security system will be at risk. It is projected that these persistent deficits will trigger a 23-24% cut in Social Security and an 11% cut to Medicare in 7 years. Both parties are committed to this policy because cutting spending and raising taxes is so unpopular. If and when the Social Security system becomes insolvent, they will suffer the political consequences of cutting spending on the programs without doing anything to actually create long term stability.
However, politics should not just about popularity and winning elections. Fundamentally, it is about good governance. It is not good governance to saddle younger generations with mountains of debt that even they will be unable to repay without difficult reforms. It would be good governance to change an irresponsible policy. No matter what gets cut, it will be unpopular. In the long run though, it is better for the government to be unpopular than broke.
