The National Debt — Where Do We Go From Here

As this article is being written, the United States is over $37 trillion in debt. This substantial amount is daunting to many, especially with reports suggesting that millennials and Gen Z will be paying the price for this enormous bill. As a member of Gen Z, this is a pertinent issue that will become a larger issue in our politics. With this in mind, it is important for citizens to gain understanding of the status of American debt, so that we can fully understand how it affects our future.

The live US National Debt Clock is a great stepping stone to understanding our debt. Our debt is rising substantially — every five seconds it grows by another $100,000. This amounts to an additional trillion dollars in debt every 100 days. Per citizen, the debt adds to $109,232 per citizen, or $324,123 per tax payer. The federal revenue from tax dollars is about $5.5 trillion, while the federal spending is $7.4 trillion, equating to a $1.9 trillion deficit for the current year.

The Peter G. Peterson Foundation breaks down why the debt has ballooned so much in the past decade. Firstly, the demographics in America have changed drastically. The baby boomer generation is retiring, thereby qualifying for Social Security and Medicaid. Our federal budget is ill-equipped for the influx of new retirees, thus putting the federal government in a place where they must borrow money to keep these programs alive. Social Security and Medicaid are both considered mandatory spending by the federal government, and as people live longer life spans, the government needs to find a way to budget for the increase in spending on these programs. Additionally, the federal government has proven unable to handle the immense cost of the healthcare system, and our current tax code keeps our revenue well below spending year after year.

The scariest part of the debt is not just the principle, but the interest accruing from it. Last year, the US government paid $1.13 trillion of the debt, but this didn’t even start paying off the principal, just a portion of the interest. For those who believe the government spends too much on either defense or Medicare, just know that paying off the interest on our debt dwarfs both of those. In 2024, paying the interest on the national debt was the second highest expenditure in that year, behind Social Security, at a whopping $881 billion. As the interest compounds, this number will only grow and eat up more of our tax revenue. While this spiral continues, the government will have less money to spend on resources that will benefit our country as a whole.

The last time the national debt grew this high relative to our GDP was in the wake of World War II. However, our rapidly expanding economy was able to quickly outpace the loans the government took out. NPR hosted three economists with various specialties to discuss how to rectify our seemingly insurmountable problem. Glenn Hubbard, a top economist who advised George W. Bush, discussed how cutting taxes on corporations spurs more investment and innovation, therefore accelerating the economy. Doug Elmendorf, director of the Congressional Budget Office from 2009 to 2015, held a different approach. He stated that investing in social programs fosters a better environment for the next generation of workers to prosper. Finally, Zach Liscow, chief economist of the Office of Management and Budget under President Joe Biden, spoke about how making it easier to build in America brings more revenue, particularly when those constructions are public projects.

These three policies are at the forefront of many politicians’ campaigns, and are all possible solutions to this issue. However, because the debt is exponentially growing, the first and third options are the most applicable to solve this crisis before it balloons any further. The National Bureau of Economic Research corroborates Hubbard’s claim. They found that although the overall wages did not increase for workers, firms in their study were able to expand their business and increase their overall workforce. Research found that these new jobs gave underrepresented groups more opportunities, aiding them into a better financial situation.

Along with these changes, there must be a massive shift in what the government is spending money on. Spending cuts are absolutely needed. In the short term, it is difficult for the public to stomach reduced access to government programs and grants. However, the amount that we are spending now is incredibly unsustainable, and there needs to be a mentality change. If we do not address these issues today, they will only become bigger issues to handle down the road.