Every four years, Americans fall in love with a fantasy. A new president will change the federal deficit.
Republicans promise that growth will exceed the debt burden.
Democrats promise that taxes on the rich will fix this.
And the US Debt Clock continues to spin like a Vegas slot machine that only pays out in red ink.
As of 2026, the United States will owe approximately $38.5 trillion, and this amount is increasing by approximately $8 billion per day. Net interest payments on the debt officially exceed our annual defense budget.
We don’t discuss politics anymore. We are calculating.
The Trump Plan: Growth + Tariffs + Tax Cuts
Let’s face it: Trump’s economic philosophy has been consistent since he started campaigning.
Extend tax cuts – no tax on tips, overtime or Social Security.
Add tariff revenue to that – now a political and legal battle.
Reduce bureaucracy – started with DOGE.
GDP is growing faster than expenditure: an increase of just 1.4% in the last quarter.
That worked quite well when debt levels were $20 trillion lower and interest rates were near zero.
But today’s numbers are very different.
The Congressional Budget Office estimates that current policy paths will keep deficits close to $2 trillion annually and push debt to about 120% of GDP within a decade.
Here is the translation. Even if the economy is experiencing an insane rate of GDP growth, the government is still spending dramatically more than it takes in. Why is it that no one really understands income and expenditure in Washington DC and 85% of our revenue comes from the two parts of the personal income tax and the payroll tax?
The real problem is not taxes or tariffs. Here’s the 60 second explanation.
It’s interest. Lots and lots of interest. Interest on the national debt alone is expected to exceed $1 trillion by 2026 and will now account for roughly 14% of federal spending.
This means before we finance:
Defense
Social security
Medicare
Infrastructure
Our veterans
It’s like playing credit card roulette and the interest just keeps increasing with no end in sight. No State of the Union message, Republican or Democrat, can outgrow such a high interest bill.
Politicians don’t like campaigning about math
TRUMP HAS SET THE PLACE FOR A US COMEBACK AFTER BIDEN’S RAPID ECONOMY
Previous financial year:
Government spending: $7.01 trillion
Government collected: $5.23 trillion
Annual deficit: $1.78 trillion
To eliminate the deficiency overnight, you will need one of the following:
• Raise taxes by about 35% (think top tax rates going from 37% to 50%) and remember that almost half of the people in America pay no federal taxes at all. • Massive benefit cuts, which essentially means one of the big three: Medicare, Social Security or Defense. • Or grow the economy at wartime levels for ten years.
Do any of these sound realistic to you?
Why Trump Unfortunately Can’t Solve It (and No One Else Alone)
Even Trump’s policies that add tariff revenues are still expected to increase deficits over time because tax cuts reduce revenues faster than tariffs increase them.
Here’s the uncomfortable truth we all have to face. America does have policy problems, but more importantly, America has a promise problem. No one wants to sacrifice anything, and if you are in debt, something has to be sacrificed to get out of debt.
The real State of the Union
The federal debt will not be eliminated.
It will be inflated, depreciated, monetized, or slowly eroded by negative real interest rates, because mathematically a $38.5 trillion balance sheet cannot be balanced with incremental policy adjustments. The US is not going bankrupt. It dilutes.
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Presidents no longer have control over the budget deficit. Trump can change tax policy. He already did it. Congress can try to change spending. But they rarely agree. But reality is reality. Changing this quickly is like turning Queen Elizabeth over in a bathtub.
Unless America changes expectations or sacrifices are made on both sides of the aisle, the debt clock will continue to run, regardless of whose name is on the Oval Office door. The debate in Washington is ideological. The risk for all of us is that we may wear the crown as the world currency.
