Questions for Solutions

The next generation will be called upon to address the national debt as voters, leaders, and future policymakers. Fortunately, we have a variety of solutions available.
The challenge is finding the right ones.

Hand holding a red question mark next to stacks of gold coins and bundled green bills.

At Free the Facts, we believe problems aren’t partisan. Regardless of your party or ideology, the national debt creates challenges that will impact you. The key to solving them is ensuring voters and leaders have reliable information so they can engage in a meaningful conversation about the national debt and its future.

Now that you understand the national debt and some of the challenges it creates, you’re ready to ask yourself the tough questions about solutions. Every one of them has pros and cons. Your answers to those questions will be guided by your own experiences, values, perspectives, and identity.

To get started, we’ve provided you with several questions for solutions below for you to explore further. We’ve also provided some resources from a variety of perspectives to help you understand possible solutions.

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CONVERSATION

Start a national conversation about the debt

A survey found that 82 percent of Americans want lawmakers to spend more time addressing the national debt. That type of concern gives you an opportunity to discuss it with your peers and fellow voters. After reading this primer, you should have the information you need. So do it!

Conversations across the aisle: Both parties have contributed to the debt, but neither party is willing to take the lead on solving it. Bipartisan consensus got us into this mess, and only bipartisan consensus can get us out. So, what does it look like when both parties work together to find a solution?

For some historical context, read this overview of the 2010 Simpson-Bowles Commission from the Congressional Research Service (CRS). The commission proposed a mix of spending cuts and revenue increases, and it remains one of the most comprehensive attempts Congress has made to slow the growth of the national debt.
Although Congress didn’t act on the recommendations of the Simpson-Bowles Commission, lawmakers did pass more modest spending changes to address the deficit. Read this overview from the CRS to learn about the changes Congress made through the Budget Control Act of 2011, which included caps on discretionary spending.
Additionally, check out the 2010 Domenici-Rivlin Plan from the Bipartisan Policy Center (BPC) to see how other lawmakers and experts tried to address the country’s fiscal challenges at that same time. Their proposal included caps on discretionary spending, a national sales tax, and changes to Social Security and Medicare.

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A BALANCED BUDGET

Balance the federal budget

Quick refresher: The federal budget represents how much money the government plans to spend (“spending”) and take in (“revenue”) each year. When spending exceeds revenue, it’s called a deficit. Deficits add to the national debt.

Some lawmakers advocate for a balanced federal budget, which would eliminate annual deficits entirely. In this scenario, the government would only spend as much money as it takes in through revenue.

Adjust spending and revenue: A perfectly balanced budget would stop the growth of the national debt. Since the government is currently running a deficit, we’d either need to cut spending or increase revenue to make that happen. Should we make changes that would balance the federal budget?

Check out this article by the Committee for a Responsible Federal Budget (CRFB) on what steps would need to be taken to balance the budget in 10 years. If no changes are made to revenue, they argue that it would take a 27 percent cut in spending to balance the budget.
For some historical context, read this article from The New York Times on the Balanced Budget Act of 1997 passed under President Bill Clinton. Note: The last time the federal budget was “in balance” was in 2001.

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DEBT-TO-GDP

Stabilize debt-to-GDP

If balancing the federal budget sounds too difficult, you could try something more incremental like stabilizing debt-to-GDP. Remember, our debt-to-GDP is on track to grow indefinitely because our national debt is growing faster than our economy. Since debt-to-GDP is a ratio, we can stabilize it by addressing one side or the other: slowing the growth of the debt or encouraging economic growth.

Slowing the growth of the debt: We don’t need to eliminate the deficit entirely in order to stabilize debt-to-GDP. All we’d need to do is reduce the deficit enough to keep debt growth in line with economic growth. Should we slow the growth of the national debt?

Check out this policy brief by the Center for American Progress on what it would take to stabilize debt-to-GDP. They argue it would take closing a fiscal gap of 1.6 percent of GDP.
Look at this article by the CRFB on deficit reduction. According to them, it would take savings of $9.3 trillion to stabilize the debt-to-GDP at 100 percent.
Read the testimony of Jonathan Burks with the BPC before the House Budget Committee on stabilizing the debt by keeping deficits to 3 percent of GDP.

Encouraging economic growth: On the flip side, we could also boost economic growth so it’s in line with debt growth. There are several ways to achieve this. One way is to spend more money on things like education, transportation, and technology in the short term to boost economic growth in the long term. Should we encourage economic growth to stabilize debt-to-GDP?

Check out this report by the CBPP that includes a discussion of how government spending on housing, support for children, and the workforce can impact the federal deficit.
Read this article by the American Enterprise Institute on how immigration reforms could spur economic growth.
Read this plan from American Compass for a broad set of proposals to increase economic growth, including increasing domestic manufacturing, promoting non-college career pathways, and increasing support for working families.

For more proposals on stabilizing debt-to-GDP, check out this list compiled by the Peterson Foundation.