Congress is Vital
- Fix Federal Debt
- Jun 1
- 3 min read
The Relentless Federal Debt Growth is Perilous
Problem Statement
The federal debt has grown dramatically since the Great Recession of 2008, reached harmful levels, requires a comprehensive and sustainable array of solutions, but still is not receiving serious attention from our government.
Objective
For the Congress and Executive Branch to elevate the creation and implementation of responsible and permanent fiscal policies to the highest priority.
Definitions
Federal Debt is the amount of money the federal government has borrowed, generally by selling U. S. Treasure bonds. Federal Debt Owed to the Public is the amount owed to people, institutions, and governments, domestic and international. Total Federal Debt also includes amounts the federal government owes to itself.
Deficit is the amount of money by which spending exceeds income in one fiscal year.
Gross Domestic Product (GDP) is the monetary measure of all the goods and services produced in a country in one year, a measure of the size and strength of the economy.
Fiscal means related to taxation, public revenues, or public debt.
Sustainable refers to the ability to be maintained or continued over time.
Measure of the Severity of Governmental Debt
Just as a wealthy individual or a financially healthy corporation can comfortably make contractual interest and principal payments on debt, the ability of a country to do the same is directly affected by the size (GDP) and health of its economy. Many economists use Debt Owed to the Public/GDP as a measure. The table and graph below use Total Debt/GDP; they paint grim pictures of the U.S. government’s fiscal position and trend.
Perilous? High Risk? Major Reasons
Interest Costs: The Treasury Department holds frequent auctions to sell bonds and other securities to banks and other institutions that want to invest funds safely for a modest return. Buyers demand that the government pay higher interest rates if and when they believe that the risk of default has increased, namely the probability that the government will not be able to make interest payments or return the principal in the future. Since most bonds have maturity dates 10, 20, and even 30 years into the future, buyers must have solid confidence to accept low interest rates on a bond not due for repayment for decades. If sufficient buyers ever fail to show up at the auctions, the genie is out of the bottle. Recently, we have seen evidence that the bond markets are quite nervous.
Global Bond Rout Worsens as 30-Year Yield Surges Past 5%. Government Debt Isn’t a Place to Hide. Barrons, May 22, 2025
Bond Selloff Rolls On as U.S. House Passes Trump’s Big Beautiful Tax Bill, Reuters, May 22, 2025
Fear of Uncontrolled Deficit Drives U.S. 30-Year Debt to Highest Level since Lehman Brothers, El Mundo, May 22, 2025
Total interest costs are a function of both the amount of debt and the interest rates paid. The amount of debt is growing relentlessly as fiscal outlays continue to outpace revenues creating $1-2 trillion deficits annually; both outlays and revenues are specific powers and duties of Congress. Investors demand higher rates as perceived risk increases. See the table and the chart below to see how Net Interest is already crowding out other important categories of the budget and is trending worse over the next ten years to more than double that in 2024. Keep in mind that interest payments do not pay for any government programs.
Mandatory Programs
Mandatory programs are primarily Social Security and the Major Health Care Programs. They are underfunded now and on a path to becoming more so. The Social Security Trust Fund will be exhausted in less than 10 years. The public and Congress resist changes. But look at the numbers in the table above. Mandatory programs are already accounting for 60% of government Outlays and 82% of government Revenues. In 2025, spending for the Mandatory Programs plus Interest (also not optional) is only 1% lower than total Revenues. So, we barely could have had a balanced budget for 2025 only if we had NO Discretionary spending –
including Defense and a host of other programs. It is unrealistic to believe that our serious fiscal problems can be solved without having the Mandatory programs on the reform table with all other options including tax changes.
Mandatory programs and Interest are crowding out other needed government programs and forcing increasing deficits, growth of debt, and growth in interest rates. This, my friends, triggered the choice of the word “Relentless” in the title of this article. Tune in for additional posts on the federal debt impasse.
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