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While Americans seem to be doing more waste, fraud and abuse in the federal government every day, unfortunately America is on an unsustainable financial path and numbers don't lie. National debt has skyrocketed above $36.5 trillion, with no signs of slowing down. Both parties are colluding, but with the unrelenting driving force on the left for government expansion, social programs and reckless spending, they have taken a trajectory towards an inevitable $40 trillion debt.
Financial budget items that no one mentions
If we take a close look at what is happening in the fiscal budget, we see that there are only substantial four-line items in the overall US spending. here it is:
1. Healthcare Programs (Medicare and Medicaid)
These programs collectively account for approximately $1.67 trillion per year, accounting for 24% of the federal budget. Medicare provides health insurance to seniors, while Medicaid supports low-income people. With the aging population and rising healthcare costs, it is difficult to cut spending in this sector.
The DOGE's initial findings on DEI spending in the Department of Defense save $80 million, according to the agency.
2. social security
The annual spending is around $1.5 trillion, and Social Security accounts for 21% of the budget. Provide retirement and disability benefits to eligible citizens. Given its role as a major source of income for many retirees, attempts to reduce profits face great political resistance.
Doge is cutting its budget. It's a good start and not enough. File: US government bonds exceed $36 trillion. (All-in-podcast/Counteer Gemal/Peter G. Peterson Foundation/Chip Somodé Villa/Getty Images)
3. Net interest on debt
Here is some of the questions about why $40 trillion in debt is inevitable. Interest payments on national debt are staggering $1.1 trillion per year, consisting of 15.6% of the budget. As debt increases and interest rates rise, payments for these debts are similar to households with credit card debt that have run wild on a one-way dead-end road to bankruptcy.
4. Defense expenditure
The defense budget is around $884 billion, accounting for 12.5% of federal spending. This includes military operations, personnel, equipment, and funding for research. National security concerns and geopolitical dynamics make defense politically sensitive.
Adding all four line items makes it almost 73% of the total fiscal budget. Certainly, it makes sense to rock the federal government upside down, just like you were looking for coins on the couch. However, it does not make up for the money needed to run these three major programs. Our own debt sinks us deeper into the hole as interest rates remain high.
Reducing spending in these areas is full of challenges. Healthcare and social security are essential for millions, and any reductions can have widespread social implications. Defense spending is closely linked to national security and is declining politically contentiously. Interest payments are mandatory. As debt escalates, these payments create a vicious cycle as well.
How about generating more revenue? Three biggest revenue sources
The federal government's revenues are now just over $5 trillion. Despite topics about tariffs and other taxes, we are making revenue from three sources.
1. Personal Income Tax
These taxes account for approximately 51.6% of the total federal revenue. Given that almost 50% of Americans don't pay federal income tax at all, when you hear the rally screaming “tax the rich,” it's a harsh reality that the main way you can increase your income is to pay more people who are paying more. Rising income tax rates are politically challenging, with the highest levels of income coming from people who start businesses and create jobs for Americans, potentially thwarting economic growth.
2. Payroll tax
It accounts for approximately 33% of federal revenue, and payroll taxes are based on social insurance programs such as Social Security and Medicare. This includes 6.2% paying primarily to Social Security, 1.45% on Medicare, and the unemployment tax. Over the past 25 years, several proposals have been debated on how to overhaul income from these sources, including an unlimited tax on income for Social Security, an increase in Social Security taxes to 7.2% over the next 10 years, and an ordinary retirement age of 70 for those born in 1980.
3. Corporate Income Tax
Sadly, people complain that if President Donald Trump lowers taxes on businesses it could seriously damage the economy. The reality is that the taxes provided by businesses are comparable to just 9% of federal revenue. Even if the company's tax rate returns to 35%, the tax revenues from this change could be pale compared to the US's increasing competitiveness that it is located in our country.
Elon Musk's efforts to cut the federal government are simply removing $36 trillion in national debt. File: Musk will speak at the Conservative Political Action Conference (CPAC) held at the Gaylord National Resort Hotel and Convention Center in Oxon Hill, Maryland on February 20, 2025. ((Photo: Andrew Harnik/Getty Images))
There is a problem with growing revenue from all of these sources. High individual taxes can curb consumer spending and savings. Increases in payroll taxes can burden both employees and employers and affect employment rates. Increased corporate taxes could lead companies to move operations overseas and reduce their domestic tax base.
Political Reality: Doge is a start, but both parties must give in to solve this problem…
So far, Doge has estimated savings of over $100 billion. This is a combination of asset sales, contract/lease cancellation and renegotiation, fraud and improper payment removal, grant cancellation, interest savings, program changes, regulatory savings and workforce deductions. Don't reveal the fact that $100 billion makes sense. But that's far from filling the gap in the $2 trillion budget deficit we currently operate. Half of that deficit is net income from debt.
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What Americans hate most is hearing bad news or difficult news. So we will elect a new president with a huge rating of recognition until we make difficult changes. No one likes difficult changes. The approval rate will fall, and politicians will adjust to the advantage of the American people.
Republicans are talking about financial responsibility, but they largely abandoned the fight for a balanced budget. It is necessary in the worst possible way. National debt has skyrocketed under both George W. Bush and President Trump, proving that even so-called conservatives are willing to use them freely when they fit their agenda.
The reality is that the taxes provided by businesses are comparable to just 9% of federal revenue. Even if the company's tax rate returns to 35%, the tax revenues from this change could be pale compared to the US's increasing competitiveness that it is located in our country.
Democrats, meanwhile, are openly accepting a massive government expansion, arguing that “deficits are not important” and that the rich can simply levie more taxes to cover costs. That's always a democratic answer, play Robin Hood. Take from the rich and give to those who deserve it (even after you crush your tail to win it).
The truth is that taxing wealthy people is not enough. Even if the government confiscated all the wealth of American billionaires, it rarely produced dents in citizen debt. The only real solution is to cut spending and increase taxes at the same time, but neither side has the political will to do so. The attempts to curb the financially is filled with fierce opposition from special interest groups and politicians, media rage, and accusations of cruelty on the one hand.
The Road to Move: We're stuck, and that's why we hit 40 trillion dollars
The US is competing for $40 trillion in debt, and the consequences will be severe. Inflation, economic stagnation and global decline are just some of the risks we face if we don't put our finances in place.
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When your child crys at a candy store, do you always buy them candies? The answer is no. The answer is not what Americans want to hear. The answer is when we avoid a full-scale economic crisis through serious spending cuts, qualification reforms and a return to sound fiscal policy. This isn't easy and isn't popular, but the alternative – bankrupt America – is much worse.
Unless we do something right away, the political class that doesn't want to addicted to Washington's spending and tough choices isn't just going to hit $40 trillion in debt – that's inevitable.
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