The United States federal government has been running a budget deficit for over a decade, accumulating a national debt that exceeds $30 trillion. $30 Trillion! What does that even mean?!
Each year, we spend more than $500 billion on interest on that debt. This is a huge waste of money that overwhelmingly benefits the wealthiest among us.
The federal debt is a massive financial burden for future generations and poses significant short and long-term risks.
There are so many better ways for us to spend that $500 billion a year – it’s maddening.
The national debt is a bottomless pit that the government is constantly pouring money into, with little hope of ever filling it up.
Negative Consequences of the Federal Debt
The federal deficit has several negative consequences that can impact both the economy and individuals.
It is a ticking time bomb
Just like a person running on a treadmill, the government is constantly making payments on the national debt but not making much progress toward paying it off.
Increased Interest Payments
One of the significant consequences of the federal deficit is increased interest payments. As the government borrows more money to finance its spending, it has to pay more interest.
Who Makes Money Off The Federal Debt?
The US government’s debt is primarily financed by the issuance of US Treasury securities, which are purchased by a variety of entities. These entities include
- Investors (Individuals, pension funds, mutual funds, insurance companies, and other institutional investors)
Foreign governments and central banks - The Federal Reserve (aka “the Fed” – which is made up of private banks) is the “central bank” of the US and is responsible for implementing monetary policy. The Fed buys US Treasury securities with the stated goal of lower interest rates and stimulating economic growth.
- The Fed earns interest on those securities, some of which it gives to the US treasury and some to private banks. Surprise surprise it’s not super simple to know how much the private banks make off our interest payments.
- In addition to being part of the federal reserve, private and public banks also hold US Treasury securities as a liquid asset, sometimes on behalf of clients.
- Finally, in just one of the many convoluted realities, the US Treasury itself may make money from the federal debt if interest rates on the securities are higher than the cost of issuing them.
Learn more about who makes money from the federal debt >>
This result of our tax dollars being given away as interest payments is in less money available for other essential services, such as education, healthcare, and infrastructure. Or God-forbid to lower taxes.
Decreased Economic Growth
The federal deficit decreases economic growth. As the government borrows more money, it competes with the private sector for credit, driving up interest rates. High-interest rates usually discourage businesses and individuals from borrowing to invest in research and innovation, hiring, or constructing, slowing down economic growth.
Reduced Fiscal Flexibility
Because of the increased interest payments and decreased economic growth, the federal deficit reduces fiscal flexibility. Particularly when matched with entitlement spending, elected officials have limited resources to invest in new initiatives and respond to unexpected events.
There are Benefits to Deficit Spending
For some (particularly those who make their money off the Federal Government) the benefits of deficit spending sometimes outweigh the cons of debt servicing.
Deficit spending can be used to stimulate economic growth. By injecting money into the economy through government spending, businesses are stimulated and jobs are created, which can help to boost economic activity. The covid stimulus spending (which don’t forget both Trump and Biden did) was a perfect example of this. While we all liked the “free” money, the cost of inflation and resulting economic slowdowns was the price.
Deficit spending can fund programs that provide long-term benefits to society, like education, healthcare, research, and infrastructure. The government has more money than the private sector, and can often take risks private markets can’t. By investing the government can create long-term benefits for the country that outweigh the short-term costs of debt servicing.
While there might be a place for deficit spending, we can’t continue increasing the debt forever. And the more we ignore the problem, the larger the debt gets. We’ve got to reduce the federal debt as much as we can as fast as we can.
Reducing The Federal Debt Helps Everything
There is no end to the benefits of a smaller federal debt and reduced spending on debt financing. Reducing the federal debt frees up money used to pay interest and allows the government to invest in things that would boost the economy, create jobs, lower taxes, and make America a stronger country
Reducing the Federal Debt Protects Our Future
The national debt is a burden that will be passed on to future generations. Reducing the debt would make the United States more financially stable and less vulnerable to economic shocks. If we don’t reduce the debt, our children and grandchildren will have to pay higher taxes or face cuts in government services. Reducing the debt now will make it easier for future generations to pay their own way and build a better future for themselves.
We Can Finally Escape The Debt Ceiling Nightmare
The debt ceiling debate is a recurring political nightmare that has plagued us for years. Essentially, the debt ceiling is a legal limit on the amount of money the government is allowed to borrow to pay for its expenses. When the government reaches this limit, Congress must vote to raise it to avoid a default on the national debt.
This debate is often fraught with political posturing and brinkmanship, with both parties using the debt ceiling as a bargaining chip to extract concessions from the other. This has led to several government shutdowns, credit rating downgrades, and a general sense of instability in the global economy. It’s just a dumb waste of time, the only thing our elected officials are good at – wasting time and money on stupid shit.
Reducing the national debt would eliminate the need for this recurring nightmare. By bringing the debt under control, the government would not need to continually raise the debt ceiling, and the political posturing and brinkmanship that goes along with it could be avoided.
This would bring stability and predictability to the financial markets and would allow the government to focus on more pressing issues facing the country, rather than engaging in partisan battles over the debt ceiling.
Strategies for Reducing the Federal Debt
Reducing the federal deficit requires a comprehensive approach. We must address core issues that cause debt such as spending more than what is earned, borrowing at unsustainable rates, and preserving entitlement programs without any reform.
As citizens, we have to take responsibility for our actions and how they enable these spendthrift politicians. The point isn’t just to pay off the debt but to ensure higher levels of savings and greater economic stability in the long run.
Balancing Short-Term and Long-Term Goals
Because of the massive implications of the federal budget, we have to be careful about balancing short-term and long-term goals. Immediate action is no doubt necessary, and sustainable solutions are needed for long-term stability. This may involve a mix of short-term spending cuts and revenue increases and long-term entitlement reform to ensure the government remains fiscally responsible.
Spending Cuts
Cutting spending in areas where it is not necessary is the obvious first step.
Many areas of government spending have been criticized as wasteful. Some examples include lavish conferences, use-it-or-lose-it purchases made by agencies before the end of the fiscal year (FY), subsidies to dead farmers, or scratch-your-head programs, such as paying for a reality TV show in India¹.
Republicans specifically are more likely to decry a general “waste” but along with their Democratic counterparts are mum about specifics (because they are both the same). Nevertheless, there are all kinds of dubious places the government spends money on.
- Corporate subsidies: The government provides unnecessary subsidies to large corporations, including agriculture, energy, and transportation, often as a result of lobbying (aka legalized bribes).
- Corporate welfare: The government gives tax breaks and other benefits to corporations, many of which are wasteful.
- Defense spending: While spending on defense has its place, the budget for defense is clearly bloated and wasteful and could be trimmed without compromising safety.
- Foreign aid: Some argue that the government should focus on domestic issues rather than sending money overseas for foreign aid.
- Social welfare programs: While many people believe social welfare programs are important, some argue that they are too costly, create a culture of dependency, and discourage people from working. At the very least there is plenty of room for reform, better goals, cost-cutting, and efficiency.
- Government bureaucracy: The government employs a large number of people, and much of this bureaucracy is wasteful and inefficient.
- Congressional perks: Some criticize the perks that members of Congress receive, such as generous pensions and health care benefits, as unnecessary and wasteful.
- Government Pensions: The government provides pensions to its employees, and some people believe that these pensions are too generous and that they are unsustainable.
There’s no shortage of areas where spending cuts can be done in a way that promotes prosperity without causing harm. We can cut the federal budget and promote the public at the same time.
Spending Cuts Have To Be Done Competently
Because we have such incompetent leaders, it’s difficult to trust them to do anything right. While cutting national debt is important, if federal spending is cut too quickly or abruptly, there could be all kinds of negative effects on the economy and society.
- Economic slowdown: Government spending is a major driver of economic activity, and sudden cuts could lead to layoffs, reduced business activity, and decreased consumer spending.
- Social program disruptions: Many federal programs, such as Social Security, Medicare, and Medicaid, provide essential support to millions of Americans. Abrupt cuts to these programs could leave vulnerable populations without critical resources, such as healthcare or income support, which could have serious negative impacts on their well-being as well as their communities.
- Increased crime and violence: When people are desperate, they often resort to crime or violence. If federal spending is cut too quickly and drastically, it could lead to increased levels of violence, criminal activity, and rioting in communities across the country.
- Job losses: Federal spending cuts could lead to layoffs and job losses in many industries, particularly those that rely on government contracts or subsidies. This could have a ripple effect throughout the economy, leading to further job losses and reduced economic activity.
- Increased inequality: If federal spending cuts disproportionately impact low-income or vulnerable populations, it could worsen income inequality and exacerbate social and economic divisions.
- Reduced investment: If the government cuts spending too quickly, it could also reduce confidence in the economy and discourage private investment. This could have long-term negative impacts on economic growth and job creation.
Overall, while reducing federal spending is an important goal for reducing the federal deficit and improving long-term fiscal sustainability, it is important to do so carefully and gradually, in a way that minimizes negative impacts on the economy and society.
Remember the Sequester fiasco?
The sequester was a set of automatic spending cuts that were agreed upon by Congress and President Obama in 2011 as part of a compromise to raise the debt ceiling. The supposed goal of the sequester was to reduce the federal budget deficit by cutting spending.
The sequester deal was crafted to implement cuts automatically without regard for their impact on specific programs or priorities. But it was never supposed to go into effect, because officials were supposed to be smarter about how and where the cuts happened.
But because we have terrible leaders, they never got around to doing their job and across-the-board cuts went into effect. It was a blunt and poorly designed tool for reducing the deficit. It didn’t address the underlying causes of the federal budget deficit, such as unsustainable entitlement spending, a byzantine tax code, corporate influence on government, and on and on.
Like they always do, instead of addressing the root causes, the shitheads in charge resorted to quick fixes that may provide short-term relief but fail to address the underlying issues. The sequester was just one example of how politicians often use gimmicks and short-term fixes to avoid dealing with the underlying problems facing the country. Any reasonable American is increasingly disillusioned with our elected leaders and frustrated by their inability to address basic reality.
Being Smart About Reducing The Debt
The federal debt is a complex issue that requires thoughtful leadership and strategic decision-making. While there’s an endless amount of strategies that can help reduce the national debt, it’s unlikely the clowns we have representing us will be lifting a finger to help average Americans anytime soon.
If we want the government to function, we’re going to need better leaders, a source of concern for many Americans. The people we have now may be smart, but only when it comes to protecting their interests. To address the federal debt crisis, we need leaders who are willing to put aside partisan politics and work toward sustainable solutions that benefit all Americans.
Better leaders
We need leaders who are willing to make tough decisions, even if they are unpopular. We need leaders who are not afraid to stand up to special interests. And we need leaders who are willing to work together to find solutions.
We need leaders with the political will to get things done. Congress is full of bums. Elected officials are more interested in scoring political points and catering to special interests than they are in making the tough decisions required to address the debt. We need leaders who are willing to prioritize the long-term financial health of our country over short-term political gain.
We also need leaders who are not afraid to stand up to special interests. Special interests often block efforts to reduce the debt. We need leaders who are willing to fight for the interests of the American people instead of protecting special interests.
We need leaders who are willing to work across party lines, engage in productive dialogue and find common ground. The federal debt is not a partisan issue – it affects all Americans, regardless of their political affiliation.
It is a complex issue, and it will require the cooperation of both parties in Congress.
We need leaders who are willing to work together to find sustainable solutions that benefit all Americans, rather than engaging in political brinkmanship and partisan posturing.
We need competent leaders who are willing to put aside their differences and work together for the common good.
Reform the Election System
Reforming the election cycle could potentially have an impact on federal spending, but the connection is not as direct as other proposed solutions. One argument is that the current election cycle encourages short-term thinking and decision-making by politicians who are focused on getting re-elected rather than making decisions that may be unpopular but are fiscally responsible. This can lead to policies that increase federal spending without long-term planning or consideration of the budgetary impact.
By reforming the election cycle to reduce the influence of money in politics, limit the length of campaigns, and incentivize long-term planning, politicians may be more willing to make difficult decisions that reduce federal spending in the long run. However, the impact of election cycle reform on federal spending is indirect and would require a significant overhaul of the current political system. Other solutions, such as entitlement reform and reducing wasteful spending, may be more effective in the short term for reducing federal spending.
Reducing the influence of lobbying in Washington could potentially lead to a reduction in government spending. Currently, powerful interest groups can influence lawmakers and government policies in their favor, often resulting in government spending that benefits those interest groups rather than the general public.
If lobbying were to be reduced, lawmakers may be able to focus more on the needs of their constituents and the general public, rather than the desires of powerful interest groups. This could lead to a reduction in government spending on programs and policies that primarily benefit those interest groups.
However, it should be noted that lobbying is not the only factor influencing government spending, and reducing its influence may not be a comprehensive solution to reducing the federal budget. Other factors, such as entitlement spending and defense spending, also play a significant role in government spending and would need to be addressed as well.
Reduce The Cost Of Health Care
A significant portion of federal spending goes towards healthcare programs such as Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP). These programs provide healthcare coverage to millions of Americans, but they also contribute to the growing federal deficit. One way to reduce spending in this area is to focus on reducing the overall cost of healthcare. This can be achieved by implementing cost-saving measures such as improving the efficiency of healthcare delivery, reducing administrative costs, and promoting preventive care.
How to reduce the cost of health care >>
Transparency
The cliche is that sunlight is a great disinfectant.
Increased transparency allows citizens to better understand how tax dollars are spent, which can aid in holding leaders accountable, which can lead to more responsible budgeting and less waste.
It can also encourage competition among contractors bidding for government contracts. When companies know that their bids and performance will be publicly scrutinized, they are more likely to offer competitive rates and efficient service. It also eliminates some of the political patronages that allow the private sector to unfairly win bids.
Transparency can help identify areas of government spending that are not necessary or are inefficient. By making government spending data available to the public, independent analysts and researchers can identify waste and suggest areas for cost savings.
Transparency can help reduce corruption and fraud in government spending. When government spending is transparent and accountable, it is easier to identify and investigate instances of corruption or fraud, preventing taxpayer dollars from being misused or stolen.
We need more transparency everywhere, in the healthcare sector, into corporate political donations, corporate ownership and so much more.
A Real, Honest, And Accountable Media
While the media and investigative journalism can play a role in informing the public about government spending and potentially exposing cases of waste and inefficiency, it is unlikely to directly impact the federal deficit. The federal budget is determined by Congress and the executive branch, and while public pressure can influence political decisions, it is ultimately up to elected officials to make fiscal policy decisions.
That being said, a well-informed public can make more informed decisions about the policies and politicians they support, and this can potentially lead to more responsible fiscal policy decisions. Additionally, investigative journalism can uncover cases of fraud, waste, and abuse in government programs, which could save taxpayer dollars and ultimately help reduce the deficit.
Whistleblower Protections
Providing more whistleblower protections can help reduce waste, fraud, and abuse in government spending, which can in turn help reduce the federal deficit. Whistleblowers play a critical role in exposing wrongdoing and bringing transparency to government actions. By protecting whistleblowers, the government can encourage individuals to come forward with information without fear of retaliation, and this can lead to better accountability and oversight of government spending.
However, it’s worth noting that while whistleblower protections can be helpful, they may not directly address the root causes of the deficit. To truly address the deficit, a comprehensive approach is needed that includes reforms to mandatory spending programs, defense spending, and revenue generation.
Getting Money Out Of Government
Reducing the influence of lobbying in Washington could potentially lead to a reduction in government spending. Currently, powerful interest groups can influence lawmakers and government policies in their favor, often resulting in government spending that benefits those interest groups rather than the general public.
If lobbying were to be reduced, lawmakers may be able to focus more on the needs of their constituents and the general public, rather than the desires of powerful interest groups. This could lead to a reduction in government spending on programs and policies that primarily benefit those interest groups.
Giving Peace A Chance
Reducing military spending by promoting peace and diplomacy could potentially have an impact on the federal deficit. The United States spends more on defense than any other country in the world, and while national security is important, some argue that a portion of the defense budget could be reallocated to other areas to reduce the deficit.
Furthermore, advocating for peace and diplomacy does not necessarily mean that the United States should withdraw completely from international conflicts or abandon its commitments to allies. Rather, it may involve finding more cost-effective ways to address global issues and promote stability.
Addressing income inequality: One of the root causes of federal debt is income inequality. Wealthy individuals and corporations pay a smaller percentage of their income in taxes than low-income individuals, leading to a reduction in revenue for the government. Addressing income inequality could lead to a more equal distribution of wealth and a reduction in federal debt.
Investing in education and job training: Investing in education and job training can lead to a more skilled workforce, which can boost economic growth and increase tax revenue for the government. A more skilled workforce can also reduce reliance on government assistance programs, leading to a reduction in federal debt.
Promoting renewable energy and sustainable development: Promoting renewable energy and sustainable development can reduce the cost of energy and natural resources, leading to a reduction in federal debt. It can also create new jobs and boost economic growth.
Addressing the root causes of healthcare costs: Healthcare costs are a significant driver of the federal debt. Addressing the root causes of healthcare costs, such as reducing the cost of prescription drugs and promoting preventative care, can help reduce the federal debt.
Promoting international cooperation: Addressing global issues such as climate change, poverty, and conflict can have a positive impact on the US economy and reduce the federal debt. Promoting international cooperation can also reduce the need for military spending and lead to a more stable global economy.
Tax Increases
Another strategy for reducing the federal deficit is to increase tax revenue. This could involve increasing tax rates on the wealthy or introducing new taxes on goods and services. However, any tax increases must be carefully implemented to ensure they do not have negative impacts on the economy or harm vulnerable populations.
Entitlement Reform
Entitlement reform is a set of policy changes aimed at reducing the growth of federal spending on entitlement programs like Social Security, Medicare, and Medicaid. The goal of such reforms is to slow the growth of these programs’ costs over time and to reduce the long-term financial burden on the federal government.
Entitlement reform could reduce the federal debt because of lower program costs, more economic growth, and improve fiscal sustainability.
But entitlement reform is a complex and politically contentious issue, and there are many trade-offs involved in making changes to these programs. Any changes to entitlement programs would need to be carefully designed and implemented to ensure that they achieve their intended goals while minimizing negative impacts on program beneficiaries and the broader economy.
Addressing Political Obstacles
Reducing the federal deficit is a politically charged issue that can be challenging to navigate. Partisan divide, public opinion, and interest groups all pose significant obstacles to implementing policies that reduce the federal deficit. The entrenched powers will resist any form of change. The current system has created a network of special interests and lobbyists that have a vested interest in maintaining the status quo.
These special interests will not give up easily, as they have amassed significant power and influence over the years. They will resist any efforts to reduce the debt. For example, powerful pharmaceutical companies and healthcare lobbyists will resist any attempt to lower healthcare costs or lower drug prices, as it would harm their profits. Financers like free money as much as anyone and the interest payments from taxpayers go right into their private bank accounts.
Partisan Divide
Political polarization makes it difficult for politicians to work together to address the debt. Politicians are more focused on opposing each other than finding a solution to the debt problem. The political climate has become so polarized that compromise and cooperation seem impossible. Each party has its agenda and is more interested in scoring political points than finding solutions to the debt problem.
Public Opinion
Public opinion can make reducing the debt difficult if there is a lack of understanding or a misunderstanding about the nature and scope of the problem. If the public believes that reducing the debt can be achieved through simple solutions or by cutting government spending in popular areas, such as social security or healthcare, then political leaders may be less likely to pursue difficult but necessary solutions. Additionally, if the public is not engaged or aware of the issue, political leaders may not feel pressure to address it, as they may believe that it is not a priority for their constituents.
Popular programs like Social Security, Medicare, and other entitlement programs make up a significant portion of federal spending, and cutting them is politically difficult. But we can cut the waste and make them more efficient without putting people out on the streets.
Many Americans do not fully understand the severity of the federal debt problem or its long-term implications, making it difficult to build support for reducing the debt.
Public opinion is influenced by interest groups that have a stake in maintaining the status quo, such as defense contractors or healthcare providers. These groups may use their resources to sway public opinion in their favor and against reform efforts that would negatively impact their bottom line. These industries own the media and make the talking heads tell us lies.
Could You Blame The Federal Deficit On The Devil?
As an AI language model, I cannot attribute blame to an intangible concept like “the devil.” The federal deficit is a complex issue that results from a variety of economic, political, and social factors, including government spending decisions, tax policies, economic cycles, demographic changes, and more. It is important to approach the issue with a rational and evidence-based perspective to develop effective solutions.
Blaming any single entity, whether real or imagined, does not solve the complex issues that contribute to the federal deficit. It is up to the government and the people to work together to find sustainable solutions.
The Benefits of Taking Action
Reducing the federal debt can bring several benefits, including:
- Reducing the debt can help to stabilize the government’s finances, making it less likely that the country will experience an economic crisis.
- Lower debt levels lead to lower interest rates, which can make it easier and less expensive for the government and businesses to borrow money.
- By reducing the debt, the government can free up resources that can be invested in other areas, such as infrastructure, education, and research, which can help to stimulate economic growth and improve life for everyone.
- A lower debt level can help to improve the country’s standing in the international community, making it more attractive to investors and other countries.
- Reduced burden on future generations: By reducing the debt, the government can lessen the burden on future generations, who would otherwise have to pay for the interest and principal on the debt.
There are all kinds of long-term benefits to reducing federal debt.
The Role of Citizen Advocacy
Citizen advocacy plays a crucial role in reducing the federal debt by bringing attention to the issue and putting pressure on elected officials to take action. By staying informed about the national debt and engaging in advocacy efforts, citizens can hold their representatives accountable and push for fiscally responsible policies.
Citizens can write letters and emails to their representatives, attend town hall meetings, and participate in public demonstrations to make their voices heard. They can also join advocacy groups and organizations that are focused on reducing the national debt, such as the Committee for a Responsible Federal Budget, which advocates for bipartisan solutions to address the debt.
Citizen advocacy can also help to create a culture of fiscal responsibility and encourage policymakers to prioritize reducing debt in their decision-making processes. By working together and advocating for sound fiscal policies, citizens can help ensure a more stable and prosperous economic future for the country.
The Urgency of Addressing the Federal Deficit
Reducing the federal deficit is crucial to the long-term economic stability of the United States. The negative consequences of the federal deficit are significant and can harm both individuals and the economy. It requires a comprehensive approach that includes both spending cuts and tax increases while balancing short-term and long-term goals. Addressing political obstacles is also crucial to implementing policies that reduce the federal deficit. Taking action now will ensure a better future for generations to come.
The need for immediate action and sustainable solutions to address the federal debt is urgent for several reasons. One of the most pressing is the cost of servicing the debt, which continues to grow every year. This money could be better spent on other priorities, such as education, healthcare, and infrastructure.
The US government must take immediate action to address the federal debt and find sustainable solutions that will put the country on a path to long-term fiscal stability. This will require a combination of strategies, including reducing entitlement spending, reforming the tax code, and reducing discretionary spending.
Ultimately, addressing the federal debt will require a commitment to responsible governance and a willingness to make difficult choices in the interest of the country’s long-term economic and political health. By taking action now and finding sustainable solutions, we can reduce the cost of servicing the federal debt and ensure a brighter future for all Americans.
