If you were Presdident, and had a House majority and Senate supermajority on your side, how would you address our national debt?
For a summary of the national debt, see below.
Throughout the 20th century and into the 21st century, the US government has generally outspent its tax revenue every year, with the exception of a few years in the mid 1920s, late 1940s, and late 1990s. This has resulted in an increasing debt that now stands at a total of 22 trillion dollars, highest figure in the world for any country, although it is 14th in the world in terms of percentage to its gross domestic product, or GDP. The public debt as a percentage of GDP is currently at 80%, and is at its highest in the nation’s history since the end of World War II, when it was at 110%.
It declined rapidly after World War II, reaching a low under President Nixon, and has risen since then. It rose sharply under President Reagan due to tax cuts and increased defense spending, fell sharply under President Clinton due to decreased military spending, rose sharply under President George W Bush due to tax cuts, increased military spending and a massive 2008 bank bailout, and rose sharply President Obama due to decreased revenue from the Great Recession and and economic stimulus efforts at combating the recession. Along with further tax cuts under President Trump, it is estimated to reach 100% of the GDP in ten years.
Foreign holders of the debt is at approximately 28%, with a sixth of the debt belonging to China and another sixth of the debt belonging to Japan. China has been decreasing its holdings in recent years, however, due to fears of its stability.
Currently, the US receives approximately 3.3 trillion US dollars in revenue from taxes each year and spends approximately 4 trillion US dollars, which created a deficit of over 700 billion US dollars in 2018, highest in history. Two thirds of current spending is mandatory, with almost 25% going to Social Security and 15% going to Medicare payments. Debt interest accounts for 7% of total spending. These figures are all expected to continue to increase in the coming years. In non-mandatory spending, defense spending, which is at 15% of total spending, accounts for over half of all non-mandatory spending.
The Social Security Trust Fund, which currently sits at 2.79 trillion US dollars, started paying out more than it received in Social Security taxes in 2010, although interest payments on the trust fund has helped it continue to operate on a surplus, from which the government has used to offset budget spending elsewhere. This surplus, however, is expected to end in 2019, after which the Trust Fund is expected to be depleted by 2034 unless the US borrows elsewhere to maintain Social Security payments, or makes changes to the program. The Medicare situation is even more dire, as the program is expected to run out of funds in less than a decade if no changes are made in its current revenue and/or spending. Both of these are due to the increasing numbers of Baby Boom generation retirees in recent and coming years.