The 2024 election season has come to an end. Now it is time for the next Congress and President-elect Trump to get to work. As the United States faces record-high debt, the need for fiscal discipline has never been more urgent.
Between 2009 and 2022, policymakers borrowed more than $18 trillion to fund the ongoing activities of the federal government. To put that in historical terms, that’s more debt than we accumulated in our first 233 years as a nation. While some of this borrowing was crucial to addressing the 2008 financial crisis and the COVID-19 pandemic, an astonishing $11 trillion was used on policies unrelated to those emergencies.
Now that interest rates have climbed, the cost of servicing this debt is straining the economy, limiting policy flexibility, and placing our nation on a weak fiscal foundation. As the national debt grows, the next Congress and president must make tackling the debt a top priority.
Currently, America’s publicly held debt totals roughly $28 trillion – the equivalent of 98% of our annual economic output or Gross Domestic Product (GDP). If steps are not taken to mitigate the increase in debt, the rate could equal 122% in the next decade. In just three years, debt held by the public will exceed the record 106% of GDP reached after WWII. Among developed nations, only Japan, Italy, and Greece have higher debt-to-GDP ratios.
Today, net interest payments on the debt are the fastest-growing part of the federal budget. At $892 billion this year, these payments alone consume 3.1% of GDP, or approximately $6,800 per household. Over the next decade, these costs are expected to reach $12.9 trillion. To put this into perspective, in 2024, we will spend more on interest than on national defense, Medicare, or all programs for children combined.
When the government borrows more, private investment suffers. For every dollar of new U.S. government borrowing, overall economic investment decreases by about 33 cents. This limits economic growth, raises borrowing costs for individuals and businesses, and reduces job creation. High-interest payments crowd out spending on essential programs such as education, infrastructure, and healthcare. This leaves American society with fewer resources for vital services.
High debt and rising interest rates also drive inflation which raises the cost of everyday goods and services for American families. When inflation eats into household budgets, economic mobility and quality of life decline. Additionally, our fiscal flexibility to address emergencies and our ability to make strategic investments is severely restricted. Without a strong fiscal foundation, America’s national security is weakened, particularly when we are forced to rely on foreign countries to finance our debt.
To ensure America’s future, we need immediate and effective action. Balancing the budget in the near term is likely out of reach. However, the priority for President-elect Trump and Congress should be to slow any growth in the debt to a level below the pace of economic growth. A balanced approach to debt reduction should include careful adjustments to spending, reforms to entitlement programs like Social Security and Medicare, and smarter tax policies that close loopholes without overburdening the middle class. By setting clear, achievable targets, the next president and Congress can pave the way for meaningful reform.
America’s future depends on taking immediate and decisive action. Taking steps to solve our nation’s fiscal crisis will go a long way toward economic stability, the preservation of essential social programs, and the maintenance of American strength on the global stage. The stakes are high, and the path is challenging. However, with sound leadership and a commitment to responsible governance, we can ensure a prosperous future for generations to come.
Peter Olsen, Saratoga Springs
