The current $36 trillion and rapidly growing gross federal debt represents a moral failure that will divert critical resources away from crucial investments in our children’s, grandchildren’s and future generations’ educations, economic opportunities, and overall quality of life.
Included in this incomprehensively large national deficit is debt held by the public as well as debt held by federal trust funds and other government accounts. In very basic terms this can be thought of as debt that the government owes to others plus debt that it owes to itself.
Many economists regard debt held by the public (DHBP) as the most meaningfully quoted measurement which is typically expressed as a percentage of gross domestic product (GDP), a ratio that measures the economy’s capacity to support government borrowing over time.
U.S. DHBP reached $29 trillion in 2024 — 99% of GDP and $2 trillion more than 97% at the end of 2023. While slightly down from a 100% 74-year-high in 2020, this unsustainable trend is on track to reach 116% of GDP in 2034.
Although the COVID-19 pandemic rapidly ballooned federal debt, having reached 79% of GDP just prior to the pandemic, it has continued far out of control since the time that the health and business crisis ended.
According to the Congressional Budget Office (CBO), interest spending on the debt alone has increased by $540 billion or 153% in the three years since President Biden took office. It now costs more to service the debt than our country spends on national defense — and will be more than 36% higher within a decade.
That federal spending on net interest will total $892 billion this year alone — 36% more than last year and 153% more than during fiscal 2021.
CBO estimates that net interest outlays will jump another 14% next year and grow at an average annual rate of 6% per year for the next nine years.
Within 10 years, the CBO anticipates that annual net interest costs will exceed $1.7 trillion, deficit projections that have grown 80% since Joe Biden took office.
In other words, if you loaned the government $1 at the start of 2021 and got it back today it would only be worth about 80 cents.
So even if you received 5% interest each year, you’d still be getting less back from the Treasury than you originally lent out.
If this projection holds true, the difference between what the federal government will pay in interest this year and what it will pay a decade from now is greater than Poland’s total annual economic output.
Put another way, according to the Heritage Foundation, debt interest is now equal to more than three-quarters of all personal income taxes, and over 30% of all taxes and duties received by the Treasury last June.
Unless underlying spending costs are severely and immediately disciplined, the current trend portends a debilitating economic death spiral wherein rising deficits grow the debt, and the growth in the debt aggravates the deficit, further increasing interest costs.
Such tough love won’t be easy, especially considering that nearly two-thirds of annual federal spending is for mandatory purposes including the “big three,” Social Security, Medicare, and Medicaid, entitlement programs that don’t require Congressional votes.
Nevertheless, President-elect Donald Trump’s establishment of a temporary new Department of Government Efficiency (DOGE) headed by entrepreneurs Elon Musk and Vivek Ramaswamy plans to cut a big estimated $2 trillion annual swath of inflationary government waste. The incoming Trump administration plans to couple this with strong Cabinet and agency leadership picks dedicated to slashing excess regulations that strangle the economy.
One great way to begin will be for Trump to resume “Drill, Baby, Drill” policies promised on his first day in office to restore energy independence he previously achieved during his first term.
In addition, his administration’s EPA should immediately withdraw restrictive, costly automotive CO2 emission restrictions that effectively mandate a production shift to at least 54% EVs and 16% hybrids to meet unrealistic 2032 requirements.
Federal and state governments have no legitimate rights to tell us what cars and trucks to purchase with assistance from taxpayer subsidies and sales penalties heaped upon vehicles most of us prefer to compensate for losses.
Take for example the Biden administration’s recent $6 billion Rivian Automotive rescue loan, an EV company that lost $107,043 on each vehicle it sold during the first nine months of this year.
Ford has lost about half that amount on each EV they produced, jacking up F-150 internal combustion truck prices to compensate for these government-imposed sales revenue deficits.
It’s also way past time for a narrowly controlled GOP Congress to pass a serious federal debt limit to replace the fake one invented in 1917 for the explicit purpose of getting politicians to approve more wartime spending by separating spending votes from debt approval votes after the money has already been spent.
This will require Congress to incorporate checks and balances into the law which base spending and debt limits upon an allowable percentage of GDP rather than an inflationary dollar amount.
As pointed out by the 2024 U.S. House Budget Committee, “if we don’t act, we will be the first of our nation’s leaders to leave the next generation not with a better and brighter future, but with a worse and weaker country than we inherited.”
It’s urgent that we demonstrate adult fiscal discipline while there is still time to reverse this current debt death spiral threatening our children.
Larry Bell is an endowed professor of space architecture at the University of Houston where he founded the Sasakawa International Center for Space Architecture and the graduate space architecture program. His latest of 12 books is "Architectures Beyond Boxes and Boundaries: My Life By Design" (2022). Read Larry Bell's Reports — More Here.
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