The US’s Growing National Debt Needs to Be Solved—Soon

Everyone knows something or the other about debt: credit cards, personal loans, student loans, et cetera. Debt is considered to be something highly individualistic—even though this is not the case. And one of the most prevalent and pressing issues within the United States government, especially now, is the national debt. Specifically, the 36 trillion dollars (and rising) of debt we owe.

What is it?

In principle, national debt is similar, if not the same, to any other ordinary debt that can be incurred. It is the cumulative amount of borrowing and excessive spending that the government body as a whole partakes in and results in a deficit of capital. When the government is unable to get the money back to pay it off with methods of taxes, fees, and other sources of income, it is in a deficit. It can’t afford everything that it is spending on, and consequently begins to take excessive loans and therefore incurs debt, both privately to those who hold treasury bonds and to foreign nations, namely Japan.

Deficits occur because the U.S. government needs this capital to be able to fiscally support programs like Medicare, Medicaid, Social Security, and the military. However, it often doesn’t have the necessary funds to do so, so it has to borrow it.

A key term to understand is the debt to GDP ratio. It compares the gross domestic product (GDP), which is the total value in dollars that the United States workforce as a whole produces, against the national debt. As of right now, the debt to GDP ratio is approximately 122%, meaning that there is more debt that the US owes than it actually can produce. America as a whole doesn’t produce nearly as much revenue as its government debt.

Why Does It Need to Be Solved?

Though the national debt has never been beneficial, it is a especially a problem now.

Inflation:

Higher inflation is one of the primary effects of a rising national debt. As more treasury bonds are invested in, the Federal Reserve is essentially trading lower-yield bonds for higher-yield ones. This is called monetizing the debt. Subsequent to this process, there is often more capital in the reserve, which can significantly increase inflation in turn.

This is not an issue if there is more GDP and consumerism to match it, but as demonstrated previously, the GDP has not increased as much to match the amount of debt the government has and the amount of excessive borrowing it partakes in.

Already, inflation is one of the United States’ largest economic issues, as it impacts the very core of the population. As confidence in the dollar is eroded due to the deterioration of the economy, the citizens of the US lose purchasing power, or the ability to buy more with what they have. As inflation increases, this makes it a necessity for sellers to dramatically increase prices. This, in turn, slowly but surely diminishes quality of life, as the consumer can’t buy as much with the capital they have.

Moreover, inflation impacts saving statistics. As more and more capital is needing to be used to spend on everyday goods and services, less and less money is being put into savings. In fact, a 2024 survey from Forbes Advisor-Ipsos found that saving was 42% down throughout the United States, primarily because of inflation affecting how much consumers can purchase.

As Todd Steen, professor of economics at Hope College puts it, “Inflation makes all of our income and savings less valuable.”

All of this comes together to introduce the social part of inflationary impacts. Because marginalized groups (people of color, members of the LGBTQ+ community, etc.) are typically lower-income due to generational wealth and social disparities, inflation disproportionately impacts these individuals to a higher extent to the traditional white American. For example, in 2024, 57.2% of Hispanics reported inflationary stress, along with 53.7% of Black people saying the same thing. However, only around 43.6% of white people (despite the fact that they are the racial majority in the US) report stress under inflationary impacts.

The final major impact of inflation is correlated with commerce and industry. As consumers begin to spend more on necessities, like food, they spend less on what they don’t need. This creates a major capital gap between need industries and want industries. However, this ends up hurting the economy as a whole, as these “want” industries are crucial for gross domestic product and fiscal tax revenue.

This continues the cycle of the federal deficit and, in turn, the national debt, which feeds back into inflation, meaning that this debt is highly important to solve.

Interest Rates:

As the government buys more and more treasury bonds and other forms of public investments, this creates a fiscal phenomenon known as “crowding out.” This is because all of this excessive borrowing to raise more federal capital ends up “crowding out” private investment, which drives up interest rates in turn as said private investment does not have nearly as much funds to be able to keep rates low to not go into a substantial deficit.

As a result, taking out loans on the individual level becomes much more expensive in the long run. Consequently, there is less consumer and business investment and spending, slowing economic growth.

An increase in these rates can also be detrimental to financial markets in the United States, because investors are more likely to invest capital in safer, fixed-income securities, such as bonds. As a result, less is invested into the stock market, causing less demand and a subsequent decrease in prices, lowering the value of American companies.

Lastly, higher interest rates can also affect personal finances. For example, higher student loan debt can impact future financial stability and independence, and prevent major investments such as buying a home or a car. Higher mortgage rates can affect housing affordability nationwide, which can even exacerbate wealth gaps in terms of total assets.

Budget Cuts:

Budget cuts are also a key aspect of a high national debt. As the government is in need of more and more capital, it needs to derive funds from somewhere. More often than not, this comes from crucial programs that have a substantial impact on socioeconomics in the US.

This is already beginning to happen. Congressional Republicans have recently come up with a bill to reduce spending on federal programs like Medicaid and Social Security by two trillion dollars. These programs have helped millions in the US that are low-income, meaning that taking away funding from them would be detrimental, especially considering that they are financially fragile since the COVID-19 pandemic.

This, in turn, would exacerbate socioeconomic inequality throughout the United States, as less support for those who are not as stable or well-off financially would be disproportionately affected, as they are the primary users of these programs.

Furthermore, budget cuts to Social Security and Medicaid can also disproportionately affect marginalized groups in the US. For example, people of color, women, those with disabilities, and members of the LQBTQIA+ community will be severely impacted. This is because members of these marginalized groups are often the top utilizers of federal program services, because of the inequality in being able to secure socioeconomic independence and relative invulnerability.

How Can It Be Solved?

Achieving Greater Fiscal Responsibility:

As of right now, the government spends excessive money on programs and other fiscally-driven items that are not nearly as impactful or important as the ones that are suffering budget cuts.

Firstly, the federal government is spending a substantial amount of capital on expired programs, which are federal programs which do not have authorization to continue. These programs are often without authorization because they are not effective and therefore have lost legal rights to continue operating. However, Congress oftentimes continues to fund these programs, spending a total of 516 billion dollars spent only on them just in the fiscal year 2024.

Furthermore, the Government Accountability Office (GAO) estimates that there are around 37 duplicative or inefficient federal programs that are a significant contributor to excessive government spending – around 693 billion dollars annually.

Next, overpayments to ineligible recipients made by the federal government cost around another 247 billion dollars in FY 2024. Irresponsibility and inorganization played a major role in this.

Additionally, underutilizing federal building spaces is surprisingly a major contributor to government spending. In fact, the government only actually uses approximately 12% of the space it owns.

These are the major overspending factors that have directly contributed to our skyrocketing national debt, because the federal government is spending and borrowing exceedingly too much. In fact, in FY 2024, the government overspent by an estimated 2 trillion dollars, around 7% of the GDP in that same time period.

It is crucial that the federal government assume a higher fiscal responsibility to be able to cut spending and more effectively use capital, so that the deficit and national debt does not continue to substantially increase.

Bipartisan Cooperation:

It is often encouraged that both the Democratic and Republican parties cooperate together to solve the issue of the national debt – and it is easy to see why.

In Congress, almost every single national election in the 21st century has led to a shift in which party holds the power in legislative decision making. However, this governmental volatility has been a driving force in legislative shifts every couple of years, because economic reforms and policies are starkly different opinions between the two parties.

Because of this, passing legislation on tackling the national debt has become extremely difficult, especially with existing governmental inefficiencies. Thus, it is crucial that said legislation has bipartisan support, in order for these policies to be able to actually slow down the rising debt.

Margaret Spellings, President and CEO of the Bipartisan Policy Center says that, “Our debt is a bipartisan creation that requires bipartisan solutions. Tackling this challenge will demand tough choices about federal spending and revenues, government efficiency, and the larger structural drivers of our debt, but doing so is essential to protecting our economic stability.”

This sums up exactly what is needed for a proper and long-term solution to our debt: bipartisan cooperation to support a growing and healthy national economy.

Stimulating Economic Growth:

One of the best ways to counteract the negative impacts of inflation as a response to national debt is to foster economic growth. It helps cancel out the detrimental impacts of inflation, because there is less need for more capital as growth solves the capital inefficiency issue.

Moreover, a higher GDP output increases federal tax revenue, lessening the need to invest in more treasury bonds, reduce the crowding out of private investment, and in turn lower the federal deficit.

Allowing for private capital investment to flow more freely through the American economy is also beneficial, as it can substantially grow innovation, drive consumer spending, and therefore inject a significant amount to the economy.

All in all, driving economic growth via a higher GDP output is crucial for not only governmental and fiscal benefit, but for the benefit of the United States as a whole.

Conclusion

The federal government is currently in a substantial amount of debt, which has resulted in a substantial federal deficit that has and will continue to negatively impact the economy. Namely, inflation, interest rates, and budget cuts will all be detrimental negative consequences to the US and its people.

However, there are some key strategies that the government should utilize to begin fixing this issue, including assuming higher fiscal responsibility, bipartisan cooperation, and fostering economic growth.

It is important to understand the substantial and detrimental effects of our national debt, but also solutions to be able to economically drive the United States forward.

Sources

AYAN SHUKLA

Senior Editor — Managing Editor at The City Voice

Ayan is the managing editor of the City Voice, and a current freshman at City High Middle. He primarily writes articles about the economy, politics, and global current events and won first place in his category in the 2025 MIPA awards. He is part of Speech and Debate, the NHS Executive Board, President of the Class of 2029, MYIG, MUN, Student Ambassadors, and started the Michigan branch of a nonprofit organization.

In his free time, Ayan enjoys playing the piano and the violin, reading, and excessively drinking coffee. You can contact him atshukla-a@students.grps.orgfor any questions about his articles.

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