By Chris Talgo
This week, the U.S. national debt surpassed the rather large amount of $37 trillion. For context, the U.S. national debt reached $34 trillion in January 2024, topped $35 trillion in late July, and eclipsed $36 trillion by late November.
Obviously, the national debt is on an unsustainable trajectory. More obviously, if we don’t begin to address it now, it will only become worse.
Even if the United States were to maintain the spending status quo, that would not do nearly enough to put the nation back in a healthy economic position.
The problem is the annual interest service cost on the existing debt. This year, the United States will fork over well north of $1 trillion in net interest payments on the national debt.
Again, a little context: that number is larger than the entire budget of the defense department. In fact, in terms of line items in the budget, annual interest payment on the national debt now stands in third place, slightly behind Social Security and Medicare/Medicaid.
As anyone who has ever had a high-interest loan or credit card knows, it is the interest on the principal owed that it is the killer. Currently, the $37 trillion principal owed by the American people, mostly to us and some to other nations, is becoming a ball-and-chain on the economy.
The Federal Reserve’s reluctance to lower interest rates is not helping matters. But even if the Federal Reserve were to slash interest rates to near zero, which is probably a very bad idea, that would only help on the margins really.
The elephant in the room is the federal government’s bloated budget. This year, the federal government will spend more than $7 trillion for the first time ever, another dubious record. Meanwhile, it will incur a deficit of more than $2 trillion.
Much of these financial woes go back decades, but the stuff really hit the fan during and after the pandemic.
In 2019, the federal government spent approximately $4.4 trillion. A monumental figure, no less, but not even close to $7 trillion this year.
During the pandemic, the government put the spending on turbocharge. While this may have been justified in the very early days, when sheer panic was the norm, it continued long after the initial trauma.
In fact, it basically exists to this very day. Although the stimulus checks have stopped flowing, the huge increase in spending has accelerated in the grand scheme.
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Part of the problem is that once temporary government programs or emergency measures are put into place, they have a strong tendency to remain in place. After all, it is in the self-interest of those working for these agencies to engage in self-preservation at all costs.
Ronald Reagan was right: “No government ever voluntarily reduces itself in size. Government programs, once launched, never disappear. Actually, a government bureau is the nearest thing to eternal life we'll ever see on this earth!”
As such, the only solution to the dilemma we the people find ourselves stuck in is to cut federal spending.
It is not our fault, necessarily, that plunderous politicians have spent our money foolishly. That is par for the course. The real problem is when the people become apathetic and surrender to the siren call for more government largesse.
Indifference among the people empowers those who seek to spend other people’s money.
Fortunately, we still have time to turn the tide.
During his second term, President Trump has prioritized cutting spending like no president since Calvin Coolidge. Trump seeks to dismantle entire departments, reduce the federal bureaucracy, and end the rampant waste, fraud, and abuse.
To be sure, Trump is off to a great start. Although the reconciliation bill wasn’t perfect, it did eliminate a lot of bad spending. While some say it will add to the deficit, it is also more than likely to increase economic growth, which is another key element to righting the ship.
Moreover, the fact that Trump created the Department of Government Efficiency, which highlighted some of the most outrageous instances of government waste, fraud, and abuse, made people more aware of the situation.
This summer, Trump signed a recission package that clawed back spending, albeit to the tune of only about $9 billion.
As sad as it may seem, that is a good start. Make no mistake, we still have a very long road ahead. But the point is that we can cut spending. We can downsize the federal government. We can make some sacrifices in the short term to ensure that the American Dream remains over the long term.
Chris Talgo ([email protected]) is editorial director at The Heartland Institute.
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