The scale of the debt crisis.

[BackAgain]

I want to talk about the federal debt because I think most people fundamentally misunderstand the scale of the problem we're facing.

First, let's clarify basic terms that many people confuse. The federal deficit is how much more we spend than we take in each year. The national debt is the total accumulated amount we owe from all previous years combined. For fiscal year 2025, our deficit was approximately $1.8 trillion. Our total national debt is now over $36 trillion. Every year we run a deficit, it adds to that total debt, and we're now paying over $1 trillion annually just in interest on money we've already borrowed.

Here's the reality about military spending. Even the most dramatic cuts wouldn't solve this problem. If we completely withdrew from Europe and Asia, closed all 750+ overseas bases, and dramatically reduced our military presence globally, we might realistically save around $500 billion annually. That sounds enormous, and it is, but it would only reduce our annual deficit by roughly 25-30%. We'd still be running a deficit of $1.2-1.4 trillion every single year.

It gets worse. If you completely eliminated the military, no Army, Navy, Air Force, Marines, no defense budget whatsoever, we'd still have an annual deficit of approximately $900 billion. Think about that. The thing politicians argue about most could be entirely zeroed out and we'd still be adding nearly a trillion dollars to the national debt every year.

The structural problem is this. Total federal spending is roughly $6.8 trillion while revenue is only about $5 trillion. Just three categories, Social Security ($1.5T), Medicare/Medicaid ($1.6T), and interest on existing debt ($1T), consume nearly $4 trillion alone. That's more than our entire tax revenue before we spend a single dollar on defense, infrastructure, education, or anything else.

Here's what many people really don't understand about who we owe. The debt isn't primarily held by China or foreign adversaries. Foreign holders own about 23.5% of our debt, with China holding just 2.2% of the total. The vast majority is owned by domestic interests such as the Federal Reserve, American mutual funds and pension funds, banks, insurance companies, state and local governments, and Social Security trust funds. When we pay that $1+ trillion in annual interest, we're mostly transferring money from taxpayers to American asset holders, pension funds, 401ks, IRAs, and financial institutions.

This creates an impossible trap. We can't simply default on this debt. US Treasury bonds are the foundation of global finance, considered the world's safest asset. Every interest rate globally is priced off Treasury rates. A US default would trigger immediate economic apocalypse: pension funds would collapse, retirement accounts would evaporate, the dollar would lose reserve currency status, and the 2008 financial crisis would look mild by comparison. Defaulting to stick it to monied interests would devastate ordinary Americans whose retirement savings are in these "safe" investments.

The intergenerational injustice is profound. We're running up massive debts for current consumption and leaving the bill to future generations. By the time our great-grandchildren inherit this debt in 2125, it will be so woven into the financial system that they can't refuse to pay it without destroying their own economy. They'll be trapped, the debt too large to realistically pay off, but too catastrophic to default on. We're essentially robbing our descendants, and they'll have no choice but to service obligations created by our spending decisions.

This isn't a problem that can be solved by cutting any single area of spending or making any one policy change. It's structural and requires either massive entitlement reform, significant tax increases, or realistically both. These are political third rails that neither party wants to seriously address. The longer we wait, the deeper the hole gets and the more limited our options become.

What are your thoughts on realistic solutions? Or is this problem already beyond the point where democratic politics can address it?

I skimmed you post mainly because it was verbose.

However, I do agree with your main thesis. Our deficit spending is clearly out of control. And our debt is actually even worse than just ~$36 Trillion dollars because that doesn’t even address all of our unfunded liabilities (upwards of maybe another 100 trillion dollars). That’s $100,000,000,000,000.oo or so.

It is insanity. Some debt is one thing. But this addiction to astronomical spending is something very much darker and more dangerous.

 

[RhodyPatriot]

 

[luiza]

I want to talk about the federal debt because I think most people fundamentally misunderstand the scale of the problem we're facing.

First, let's clarify basic terms that many people confuse. The federal deficit is how much more we spend than we take in each year. The national debt is the total accumulated amount we owe from all previous years combined. For fiscal year 2025, our deficit was approximately $1.8 trillion. Our total national debt is now over $36 trillion. Every year we run a deficit, it adds to that total debt, and we're now paying over $1 trillion annually just in interest on money we've already borrowed.

Here's the reality about military spending. Even the most dramatic cuts wouldn't solve this problem. If we completely withdrew from Europe and Asia, closed all 750+ overseas bases, and dramatically reduced our military presence globally, we might realistically save around $500 billion annually. That sounds enormous, and it is, but it would only reduce our annual deficit by roughly 25-30%. We'd still be running a deficit of $1.2-1.4 trillion every single year.

It gets worse. If you completely eliminated the military, no Army, Navy, Air Force, Marines, no defense budget whatsoever, we'd still have an annual deficit of approximately $900 billion. Think about that. The thing politicians argue about most could be entirely zeroed out and we'd still be adding nearly a trillion dollars to the national debt every year.

The structural problem is this. Total federal spending is roughly $6.8 trillion while revenue is only about $5 trillion. Just three categories, Social Security ($1.5T), Medicare/Medicaid ($1.6T), and interest on existing debt ($1T), consume nearly $4 trillion alone. That's more than our entire tax revenue before we spend a single dollar on defense, infrastructure, education, or anything else.

Here's what many people really don't understand about who we owe. The debt isn't primarily held by China or foreign adversaries. Foreign holders own about 23.5% of our debt, with China holding just 2.2% of the total. The vast majority is owned by domestic interests such as the Federal Reserve, American mutual funds and pension funds, banks, insurance companies, state and local governments, and Social Security trust funds. When we pay that $1+ trillion in annual interest, we're mostly transferring money from taxpayers to American asset holders, pension funds, 401ks, IRAs, and financial institutions.

This creates an impossible trap. We can't simply default on this debt. US Treasury bonds are the foundation of global finance, considered the world's safest asset. Every interest rate globally is priced off Treasury rates. A US default would trigger immediate economic apocalypse: pension funds would collapse, retirement accounts would evaporate, the dollar would lose reserve currency status, and the 2008 financial crisis would look mild by comparison. Defaulting to stick it to monied interests would devastate ordinary Americans whose retirement savings are in these "safe" investments.

The intergenerational injustice is profound. We're running up massive debts for current consumption and leaving the bill to future generations. By the time our great-grandchildren inherit this debt in 2125, it will be so woven into the financial system that they can't refuse to pay it without destroying their own economy. They'll be trapped, the debt too large to realistically pay off, but too catastrophic to default on. We're essentially robbing our descendants, and they'll have no choice but to service obligations created by our spending decisions.

This isn't a problem that can be solved by cutting any single area of spending or making any one policy change. It's structural and requires either massive entitlement reform, significant tax increases, or realistically both. These are political third rails that neither party wants to seriously address. The longer we wait, the deeper the hole gets and the more limited our options become.

What are your thoughts on realistic solutions? Or is this problem already beyond the point where democratic politics can address it?

What you describe as the problem is what Deep State is addressing , using the Iran War to create world collapse .
In a simplified nut shell
It is, tear down the old house and let's forget the past and just build a new house

You have forgotten Debt expressed as Unpaid Obligations which is around $200 Trillion
Add that to your $40 trillion .

 

[SaxonJackson]

I don't think there are any plans to fix it. They plan on sinking the currency and screwing the populace after they have all sacked the treasury. It will usher in a digital currency, one that will lead to a one world currency.

^^ Bingo ^^

By the way ... the OP pointed out in January that the national debt was just over $36 Trillion. Since Trump took office, it's now over $39 Trillion. Bah --- what's an extra $3 Trillion? Pocket change.

https://www.usdebtclock.org/

 

[SaxonJackson]

What you describe as the problem is what Deep State is addressing , using the Iran War to create world collapse .
In a simplified nut shell
It is, tear down the old house and let's forget the past and just build a new house

You have forgotten Debt expressed as Unpaid Obligations which is around $200 Trillion
Add that to your $40 trillion .

^^ Another Bingo ^^

The WEF calls it "the great reset."

The Great Reset is a proposal by the World Economic Forum to rebuild the economy sustainably following the COVID-19 pandemic. It was unveiled in May 2020 by the United Kingdom's Prince Charles and WEF director Klaus Schwab. It seeks to improve capitalism by making investments more geared toward mutual progress and focusing more on environmental initiatives. It has been criticized for using the pandemic to implement a risky experiment and a petition to stop it gained 80,000 signatures in less than 72 hours. A conspiracy theory has spread in response, claiming it will be used to bring in socialist and environmental changes and a supposed New World Order. Great Reset - Wikipedia

A 1960s song called it "the Age of Aquarius." George Bush Sr. called it "The New World Order." Trump calls it "The Golden Age."

The paper dollar is rapidly declining in buying power. A next phase of the "Golden Age" will be A.I. Surveillance combined with Digital Currency. We all know it's coming.

The OP asked "what can we do about it?" Likely nothing. The world is ruled by the Bilderberg Elite Epstein Class Oligarchy. They have the money and the power to force their agenda. About the best us peasants can do is brace ourselves. Start stockpiling food and water and considering ways to avoid "the system."

As a Christian, I plan on rejecting the "Mark of the Beast" which will be required to "buy or sell."

The "mark of the beast" is mentioned in Revelation 13:16-18, where it states that all people will receive a mark on their right hand or foreheads, and that no one can buy or sell without this mark, which is associated with the number 666. This mark symbolizes allegiance to the beast and is a significant theme in apocalyptic literature. (DuckDuckGo A.I. generated response to the "mark of the beast.")

 

[Hafar1014]

We're still wasting more than $1T on interest on that debt.
With $5T of revenue, its too much wasted, the debt needs to be paid down.

That still wastes $1T a year on interest to foreign bond holders

There are ways to raise revenue that could start paying down the debt:
A 2% transaction tax on all financial transactions
End the Capital Gains tax loophole
Send Welfare and Medicaid to the states

Should be a state responsibility, not in the Constitution

No constitutional authority for this

Research Elon Musk's "Universal High Income" proposal

We can disagree on whether wasting $1T a year is a good outcome, or if we should just start paying down the debt by rising taxes dedicated to debt reduction.

Raising taxes wont reduce the debt. Spending must be cut. We have raised taxes since 1950 and the debt still goes up

 

[Ace Nova]

We're still wasting more than $1T on interest on that debt.
With $5T of revenue, its too much wasted, the debt needs to be paid down.

That still wastes $1T a year on interest to foreign bond holders

There are ways to raise revenue that could start paying down the debt:
A 2% transaction tax on all financial transactions
End the Capital Gains tax loophole
Send Welfare and Medicaid to the states

Should be a state responsibility, not in the Constitution

No constitutional authority for this

Research Elon Musk's "Universal High Income" proposal

We can disagree on whether wasting $1T a year is a good outcome, or if we should just start paying down the debt by rising taxes dedicated to debt reduction.

You raised some interesting ideas - and they can be discussed/debated etc moving forward, I believe Medicade/Medicare/welfare is (mostly) managed by the states - the payroll taxes collected for the programs are what funds them (in part) and are distributed to the states. In terms of what states get what - that is something that could be looked at etc - but long story short - most of those programs are already handled at the state level.

About 30% of the national debt is owned by foreign bond holders.

So essentially we "owe" 70% of the debt to "ourselves" (American companies and people who gain interest from the bonds). So is it "wasting" 1 trillion a year on interest? From a profit and loss perspective?- sure. But around 70% of it is put back into the US economy (in some form or another).

That said - my main point still stands that the US debt could/should eventually take care of itself over time - the annual deficit is the much larger issue and the federal budget should eventually be balanced so that the debt can work itself down over time. - so we tend to agree there.