Sun. May 19th, 2024

Here’s How to Tackle America’s Mammoth $34 Trillion Debt Dilemma – and Why It’s Such a Tough Nut to Crack

Tyler Mitchell By Tyler Mitchell May10,2024

As the national debt has risen to more than $34 trillion and counting, Washington remains deeply divided on what to do about it. 

Congress suspended the debt ceiling last year, which limits how much the Treasury can owe to cover the government’s bills, but not without months of nasty partisan fighting between both chambers over spending. 

To keep the government from defaulting on its debt, which then stood at roughly $31 trillion, Congress ultimately agreed on a plan to cap annual government spending as part of a larger bill that estimates say could shave more than $1 trillion from the deficits over the next decade. 

Despite that deal, the national debt is still on track to climb above $54 trillion in the next 10 years, according to projections.

Here are some ideas lawmakers have proposed to lower that number — and why it’s an issue. 

Cuts to annual funding

House conservatives have been pressing for cuts to the annual government funding bills that go beyond the budget caps agreed to as part of last year’s debt ceiling plan, drawing staunch opposition from Democrats. 

Despite the limits both sides negotiated under the deal for fiscal 2024, Republicans spent much of the year pressing for government funding at levels far below the agreed-to caps, with a sharp focus on nondefense funding critical to Democratic priorities.

After months of partisan bickering and an internal clash within the House GOP over spending, both sides ultimately agreed to a deal hashing out fiscal 2024 funding at levels more in line with the previous budget caps deal. 

But there are still questions about the funding levels Republicans will seek when the GOP-led House begins crafting its government funding bills for fiscal 2025.

Under the previous budget caps deal, Congress agreed to limit government funding to about $1.59 trillion for fiscal 2024, not accounting for handshake agreements not reflected in the text of the bill that allowed for additional funding for nondefense programs. That same budget deal also called for capping spending growth at one percent for fiscal 2025. 

In an interview with The Hill earlier this month, Rep. Tom Cole (R-Okla.), the newly minted head of the House Appropriations Committee, said he doesn’t expect the party to “stray too far from” the top-line number negotiated as part of bipartisan spending limits deal last year. 

But he also suggested there could be some slack in future talks with Democrats.

“Speaker Johnson showed he’s able to get actually a few more concessions even than McCarthy got, so there may be some wiggle room,” Cole said.

Changes to entitlements 

While many Republicans have focused their sights on cuts to the annual funding bills hashed out by Congress as part of the appropriations process, others have emphasized the need for reforms for programs with funding that is not subject to the yearly spending fight — particularly Social Security and Medicare.

The two entitlement programs are often regarded as a third rail in Washington, making changes to either a heavy lift in Congress. But members on both sides have expressed support for exploring bipartisan reforms to shore solvency for the programs as both face threats to funding in the coming years.

Some Republicans have been pressing for the formation of a bipartisan fiscal commission to tackle the issue because dollars for both programs constitute a chunk of the federal budget. That includes Cole, whose ascension to the top of the powerful Appropriations Committee has drawn excitement from other proponents of the push.

“I think that’s gonna be helpful to the commission,” House Budget Committee Chair Jodey Arrington (R-Texas) told The Hill earlier this month when asked about Cole’s promotion, noting he’s “not only an advocate for it, but the author of a commission itself.”

Cole also said earlier this month he still thinks there’s an opportunity for a commission.

“So, if you’re not willing to do that, then just please don’t come talk to me about a balanced budget, because we can’t get there that way,” he added.

Raising taxes

In his budget unveiled earlier this year, President Biden leaned into tax proposals targeting the wealthy to help reduce deficits and pay for investments for social programs.

The plan includes increasing the corporate tax rate, enacting a minimum tax on billionaires and quadrupling the stock buybacks tax.

Biden also proposed shoring up solvency for Medicare’s hospital insurance trust fund by raising tax rates on Americans earning more than $400,000, raising the capital gains tax and eliminating tax subsidies for real estate and cryptocurrency transactions.

While the measures enjoy support from Democrats, much of the tax proposals are considered a non-starter with Republicans, who argue Congress should focus on cuts instead.

Tyler Mitchell

By Tyler Mitchell

Tyler is a renowned journalist with years of experience covering a wide range of topics including politics, entertainment, and technology. His insightful analysis and compelling storytelling have made him a trusted source for breaking news and expert commentary.

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One thought on “Here’s How to Tackle America’s Mammoth $34 Trillion Debt Dilemma – and Why It’s Such a Tough Nut to Crack”
  1. Given the staggering $34 trillion national debt, it’s clear that Washington is in turmoil over finding a solution. It’s concerning that despite efforts to cap spending, projections indicate a looming climb to $54 trillion in the next decade. The ongoing political battle over cuts to annual funding underscores the complexity of the issue, with no easy resolution in sight.

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