Economy
The National Debt and Fiscal Responsibility
The federal government spends more than it collects nearly every year, regardless of which party is in charge. Americans disagree about why that matters and what to do about it, but few think the current trajectory is sustainable forever.
Every household that has ever carried a credit card balance understands, in a rough way, what it means to owe more than you can quickly pay back. The federal government has carried a balance for most of the last quarter century, through administrations of both parties, and the total now exceeds the value of everything the American economy produces in a year. Interest payments alone have grown into one of the largest items in the federal budget, competing with defense, health care, and education for the same dollars.
Americans do not agree about how alarmed to be. Some see a slow-motion crisis: a debt load that will eventually force painful tax increases, benefit cuts, or a loss of confidence that raises borrowing costs for everyone, including homebuyers and small businesses. Others see a less urgent problem, noting that predictions of fiscal reckoning have arrived and failed to materialize for decades, and that a country that borrows in its own currency has more room to maneuver than a household does. Both views can point to real evidence, and both can be held by serious economists.
Why this is not a partisan scoreboard
Both parties have added significantly to the debt while in power, usually while blaming the other for doing the same. Tax cuts and spending increases both add to deficits, and each party tends to favor one over the other while opposing its counterpart. A coalition that only notices the deficit when the other party is in office has not taken the problem seriously.
A shared stake across generations
Whatever the right level of concern, the debt is fundamentally a question of what one generation asks another to pay for. Programs Americans value, from Social Security to national defense to infrastructure, all draw on the same finite capacity to tax and borrow, and someone eventually pays the bill.
What we ask of members
Common Ground does not tell members whether to prioritize tax increases, spending cuts, or economic growth as the path to fiscal balance. We ask members to look honestly at the tradeoffs their own preferred programs require, to be as concerned about deficits under leaders they like as under leaders they do not, and to treat a serious conversation about the debt as a long-term civic obligation rather than a talking point deployed only when convenient.
Civic principles
How we approach the topic, before any policy.
Concern about debt should not depend on who is in office
Deficits deserve the same scrutiny whether they result from tax cuts or spending increases, and whether the president belongs to your party or the other one. We treat selective outrage about the debt as a sign of partisanship, not principle.
Every dollar has a use and an opportunity cost
Money borrowed today is a claim on future taxpayers, and money not spent today is a program not funded or a need not met. We weigh both sides of that tradeoff honestly rather than treating spending or austerity as costless.
Growth, taxes, and spending are all part of the answer
No single lever, whether cutting programs, raising taxes, or growing the economy faster, is likely to resolve fiscal imbalances alone. We resist proposals that pretend one option can do the whole job painlessly.
Where agreement stands
- Broad agreement
The current trajectory cannot continue indefinitely
Economists and officials across the political spectrum agree that a debt growing faster than the economy indefinitely is not sustainable, even when they disagree sharply about the timeline, the mechanism of any reckoning, or the urgency of acting now.
- Broad agreement
Interest costs are crowding out other priorities
There is broad recognition that as interest payments consume a larger share of the federal budget, they leave less room for the priorities either party wants to fund, from defense to safety-net programs. This is treated as a warning sign across the spectrum, distinct from the deeper argument about causes and cures.
- Emerging agreement
A bipartisan process to address long-term entitlement funding
Interest in some kind of structured, insulated process, similar to past bipartisan commissions, to address the long-term funding of Social Security and Medicare has grown as their trust funds approach shortfalls. Agreement on the need for a process is stronger than agreement on any specific outcome it should produce.
- Contested
Whether the priority should be cutting spending or raising revenue
Some Americans believe the debt problem is fundamentally a spending problem and that tax increases would simply fund more of the growth that caused it. Others believe revenue has fallen short of what a modern government needs to deliver and that spending cuts fall hardest on people who can least absorb them. Both sides say they want a sustainable budget; they disagree fundamentally about which side of the ledger should adjust.
- Emerging agreement
The debt ceiling should not be used as a hostage-taking tool
Regardless of which party controls Congress or the White House, recurring standoffs over raising the statutory debt limit have drawn criticism from officials and economists across the spectrum as a manufactured crisis that risks the country's creditworthiness over unrelated political demands. Agreement that this brinkmanship is dangerous has grown even as the parties continue to use the leverage it provides when they hold it.
- Contested
Whether tax breaks and deductions should be scaled back to reduce the deficit
Some Americans believe the tax code is riddled with deductions, credits, and exemptions that function as spending in disguise, mostly benefiting people and industries that can afford good accountants, and that trimming them is a fairer way to close the deficit than cutting programs or raising rates. Others believe many of these provisions, from the mortgage interest deduction to retirement savings incentives, encourage behavior the country wants to support, and that removing them amounts to a tax increase on people who planned around them. Both sides want a more sustainable budget; they disagree about which provisions are loopholes and which are legitimate policy.
Open questions
We state the tension honestly and do not pretend to resolve it.
At what point, if any, does debt become an actual crisis rather than a long-term concern?
Some economists point to specific debt-to-GDP thresholds or interest rate scenarios as tipping points; others argue no such clean threshold exists and that confidence, not arithmetic, determines when borrowing costs spike. Nobody can say with certainty when or whether that moment arrives.
Should entitlement programs like Social Security and Medicare be on the table in any fiscal fix?
These programs make up a large and growing share of federal spending, which makes them hard to exclude from any serious fiscal conversation. They also represent promises made to generations of workers who paid into them, which makes changing them politically and morally fraught.
Does a country that borrows in its own currency face the same constraints as a household or business?
Some economists argue that a government issuing its own currency has more flexibility to manage debt than conventional wisdom suggests, while others warn that flexibility has limits set by inflation and investor confidence. The disagreement is technical, unresolved, and has real consequences for which fears about the debt are justified.
Should defense spending face the same scrutiny as domestic programs in any serious deficit-reduction effort?
Some argue that a budget conversation which exempts the largest discretionary category from the start is not a serious one. Others argue that global instability makes this the wrong moment to constrain military capability, and that comparing defense spending to domestic programs ignores what each is actually for. Neither position is obviously wrong, which is exactly why this question keeps resurfacing.
How much should current fiscal decisions weigh the interests of future generations who have no vote in them?
Every dollar borrowed today is, in effect, a claim on people who are not yet old enough to vote or not yet born. Some see this as a serious injustice that should constrain current spending regardless of today's needs; others note that past generations borrowed to build infrastructure, win wars, and expand opportunity that still benefits the country, and that some borrowing is itself a gift to the future. There is no agreed method for weighing obligations to people who cannot yet speak for themselves.