Can you balance the federal budget?

[Richard T]

Growing our economy faster than the deficit may seem like a simple solution—but is it realistic?

We have indeed done what you suggest before. After World War II, our national debt was above 100% of GDP, but we simply grew out of it. That’s the staggering power of exponential growth. If the economy grows steadily each year, it can become massively larger over time and eventually dwarf the debt accumulated during earlier years.

View attachment 364889
Source: History of US National Debt - Economics Help

But can we do that again?

I’d love to believe that our economy could double, and then double again (and again), until the debt-to-GDP ratio becomes minimal. But that doesn’t seem practical anymore. The post-war economic boom was fueled by massive supplies of cheap oil, coal, natural gas, and minerals. We've already used up much of the easiest and cheapest of those resources. What’s left is harder to extract, more expensive, and increasingly subject to geopolitical tension and environmental limits.

Expecting endless growth on a finite planet is, frankly, madness.

If we can no longer rely on exponential growth to shrink our debt burden, we may need to reconsider the alternative: balancing the budget—or even running a surplus.

Should we bet that exponential growth will continue for decades to come—making the national debt a minor concern—or should we begin taking serious steps to reduce it now?

You make some good points on whether we can grow out of this or not. My example was perhaps too extreme. If we even grow one percent above the growth in the deficit is does help. I really think that is doable. AI might just be the catalyst. Others could be electric battery breakthroughs, medical breakthroughs, etc. I admit too that a recession or depression could also come along and the negative growth could make the US public debt soar. So you are right too in that soon is the time to make the changes to reduce the deficit. I say soon because the USA may technically already be in a recession or will be soon. Austerity policies are not going to work well if we are in a recession.

I also am unsure that the GOP or even Trump is committed to deficit reduction. Already there are calls to expand the debt limit by another 4 trillion. Until there is a collapse of debt in some major nation, I think that the politicians will not cooperate. At what level is the collapse likely? Impossible to say. I can remember reading Federal Reserve articles twenty of more years ago that worried about 100 % of debt to GDP ratio. Well that sure was wrong. Likely it is whatever sets a panic in motion. That panic could be a war, disaster, lower sustained GDP but the result will be inflation expectations that are severe and the hurt will be evident. I still think Japan is the most likely modern nation to crack but the catalyst to bust could come from one nation, to many.
Your chart shows it great too, the debt to GDP at the end of WWII. Now that the USA is at the same % levels as the end of WWII, what would happen if there is a serious war?
Thus, it is totally reckless that we allowed this much debt. Every nation needs some slack in debt in case of an emergency. The USA has very little if any room for error.

 

[Fantine]

Growing our economy faster than the deficit may seem like a simple solution—but is it realistic?

We have indeed done what you suggest before. After World War II, our national debt was above 100% of GDP, but we simply grew out of it. That’s the staggering power of exponential growth. If the economy grows steadily each year, it can become massively larger over time and eventually dwarf the debt accumulated during earlier years.

View attachment 364889
Source: History of US National Debt - Economics Help

But can we do that again?

I’d love to believe that our economy could double, and then double again (and again), until the debt-to-GDP ratio becomes minimal. But that doesn’t seem practical anymore. The post-war economic boom was fueled by massive supplies of cheap oil, coal, natural gas, and minerals. We've already used up much of the easiest and cheapest of those resources. What’s left is harder to extract, more expensive, and increasingly subject to geopolitical tension and environmental limits.

Expecting endless growth on a finite planet is, frankly, madness.

If we can no longer rely on exponential growth to shrink our debt burden, we may need to reconsider the alternative: balancing the budget—or even running a surplus.

Should we bet that exponential growth will continue for decades to come—making the national debt a minor concern—or should we begin taking serious steps to reduce it now?

There is ample cheap energy to.be imported from a power source 93 million miles away--if Republicans would lift their heads out of the Arabian sands.

 

[Aryeh Jay]

There is ample cheap energy to.be imported from a power source 93 million miles away--if Republicans would lift their heads out of the Arabian sands.

Nope, the Desert Tortoise trump's solar.

 

[doubtingmerle]

There is ample cheap energy to be imported from a power source 93 million miles away--if Republicans would lift their heads out of the Arabian sands.

I agree—there’s a great power source 93 million miles away.

But it’s not exactly cheap to gather all the materials and build the infrastructure needed to harness that energy at scale.

The real question is whether we can construct a renewable-powered system that runs with the same simplicity, reliability, and efficiency as the fossil-fuel-driven world that emerged after World War II.

 

[A2SG]

I agree—there’s a great power source 93 million miles away.

But it’s not exactly cheap to gather all the materials and build the infrastructure needed to harness that energy at scale.

The real question is whether we can construct a renewable-powered system that runs with the same simplicity, reliability, and efficiency as the fossil-fuel-driven world that emerged after World War II.

Not to mention profitability.

-- A2SG, and that's the tipping point....

 

[doubtingmerle]

I'm sure you've heard in the news that the mention of tariffs has brought a couple of industries back to the USA.

https://www.reuters.com/business/companies-eye-us-expansion-lessen-fallout-potential-tariffs-2025-01-29/?utm_source=chatgpt.com

This must be a sad day for you, yes? Those beloved tariffs you championed—those you said would bring industry roaring back to America—are now largely gone. Trump reversed himself on the 145% tariffs on China.

That must be disappointing. You’ve told us repeatedly how much you supported those tariffs and how strongly you believed they would benefit the country.

Sorry for your loss.

Meanwhile, the rest of the world seems to be breathing a sigh of relief. The stock market erupted with enthusiasm when news of the rollback broke.

Look—when your president makes a clearly bad decision, like imposing sweeping and economically reckless tariffs, it’s okay to think for yourself and say, “this doesn’t make sense.”

 

[Laodicean60]

Sorry for your loss.

WOW, am I renting space in your mind. LOL

 

[loveofourlord]

WOW, am I renting space in your mind. LOL

why not trumps renting space in your mind.

 

[Laodicean60]

why not trumps renting space in your mind.

He doesn't. You guys keep bringing him up.

 

[loveofourlord]

He doesn't. You guys keep bringing him up.

and you keep defending him during some of the most corrupt moments :> Whose worse? Pointing out bad actions or defending?

 

[doubtingmerle]

And now Republicans are proposing cuts of $880 billion from Medicaid and other essential programs. Since Medicaid and all other government health programs total "only" $812 billion, this represents a massive cutback not just to these, but to many other programs as well.

And they want to pair this with tax cuts.

Look at the numbers. We have a deficit of $1,865 billion per year. Cutting $880 billion won’t balance the budget. When you combine it with tax decreases, it’s not even close.

Balancing the budget is very difficult. I proposed one possible solution, which includes a 25% increase in revenue and a 50% reduction in defense spending. I'm not claiming that such a budget is practical, but in my opinion, if we were serious about balancing the budget, this is the kind of direction we’d need to explore.

If you want to try different numbers than the ones I highlighted in red above, we can plug them into the spreadsheet and see how your proposal compares.