The U.S. national debt has surged to an alarming $36.2 trillion, reflecting a relentless rise in government spending over the decades.

The figure, published by the Treasury Department on January 21, is up $9 billion from the previous day alone and dwarfs the $907 billion debt level of 40 years ago.

This rapid escalation has put interest payments on the debt ahead of Medicare and defense spending, underscoring the urgent need for fiscal reforms. As Trump enters his second presidency, there are five reasons to believe he could take decisive steps to tackle this fiscal emergency.

1. Business approach to fiscal responsibility

Donald Trump has consistently framed himself as a dealmaker, often touting his business acumen and ability to manage complex financial situations.

In his first term, he focused heavily on tax reforms, deregulation, and economic growth. While his policies contributed to deficits due to tax cuts, a booming economy underpinned by low unemployment and rising GDP partially offset the fiscal strain.

In his second term, Trump could pivot toward a more aggressive fiscal strategy, leveraging his reputation as a businessman to make hard-nosed decisions about federal spending.

By applying principles of efficiency and cost-cutting, which he has long championed in his business ventures, Trump can be expected to identify opportunities to curtail wasteful expenditures and negotiate bipartisan agreements on spending caps.

2. Streamlining government spending

Trump has signaled a willingness to cut through bureaucratic inefficiencies. His establishment of the Department of Government Efficiency (DOGE), headed up by Elon Musk, indicates a focus on trimming excess across federal agencies. If implemented effectively, this initiative could reduce redundant programs, lower administrative costs, and streamline government operations.

For instance, consolidating overlapping agencies or cutting outdated programs would generate substantial savings.

Also, Trump’s emphasis on infrastructure development in his first term suggests he’s going to push public-private partnerships to reduce the direct fiscal burden on the government.

3. Addressing interest payments

One of the most concerning aspects of the rising national debt is the ballooning cost of interest payments.

The President has previously demonstrated an interest in negotiating better financial terms, and his administration is likely to explore innovative solutions to restructure or refinance parts of the debt. This might include leveraging lower interest rates on certain obligations or prioritizing payments to minimize the long-term burden.

4. Reining in Congressional spending

The second Trump presidency is also expected to see a more aggressive push to hold Congress accountable for runaway spending. The Commander-in-Chief has repeatedly criticized both parties for approving bloated budgets and has advocated for greater transparency in government expenditures. His outsider status and populist rhetoric is able to position him to challenge entrenched spending habits and push for tighter fiscal discipline.

One possible approach could involve reinstating and enforcing stricter budgetary caps, similar to those seen in the Budget Control Act of 2011. Trump’s direct communication style and strong support base might also provide the leverage needed to pressure lawmakers into adopting more austere spending measures.

5. Economic growth as a long-term solution

Trump has often tied economic growth to fiscal health. His tax cuts in the first term aimed to stimulate business investment and job creation, which, in turn, boosted federal revenue. While this strategy contributed to short-term deficits, Trump has argued that a robust economy is the best path to long-term fiscal stability.

In his second term, Trump is going to focus on economic expansion through policies that encourage innovation, tech investment, and job growth, particularly in sectors like AI and manufacturing. Sustained growth would increase tax revenues, providing a critical buffer against the mounting debt.

Challenges

However, Trump’s ability to address the debt is not without challenges.

Critics point to his first term’s spending increases and the deficit expansion under his administration as reasons to doubt his fiscal discipline.

To succeed, Trump would need to pair his bold rhetoric with pragmatic, actionable plans that garner bipartisan support. Transparency, accountability, and a clear roadmap for fiscal responsibility will be essential to gaining public and legislative backing.

The US faces a monumental fiscal issue as the national debt continues to rise at an unsustainable pace. Trump’s second term offers a unique opportunity to address this crisis with the decisiveness and innovation that many observers – even the critical ones – say are as his strengths.

Time will tell if he’s able to meet this considerable challenge.

_______________
London-born Nigel Green is founder and CEO of deVere Group. Following in his father’s footstep, he entered the financial services industry as a young adult. After working in the sector for 15 years in London, he subsequently spent several years operating within the international space, before launching deVere in 2002 with a single office in Hong Kong. Today, deVere is one of the world’s largest independent financial advisory organizations, doing business in 100 countries and with more than $12bn under advisement. It specializes global financial solutions to international, local mass affluent, and high-net-worth clients. In early 2017, it was announced that deVere would launch its own private bank. In addition, deVere also confirmed it has received its own investment banking license.