Author: R. Alan Harrop, Ph.D.
The first month of the second Trump administration has not only been historic, but has shown that he is determined to keep his promises and make “America Great Again.” This has been exhilarating for his supporters and for every patriotic American. One of the historic things he has done is the creation of the Department of Government Efficiency (DOGE). No other president has taken such a meaningful step to search out fraud, waste, and abuse in the federal government, even though we all suspected it was there. Seemingly every day, DOGE reports examples of government spending of our tax money that needs to be stopped.
Although we do not yet know the total amount of taxpayer money that can be saved, the amount will be substantial. The question that now arises is what to do with that money. At least three possible options are being considered. First: Pay down the national debt; second: use it in constructing the current budget; and third: give a direct refund back to the taxpayers. Let’s examine these options.
The national debt is currently is $36.5 trillion and increasing by $1 trillion every 100 days. By 2030, it is projected to reach $45.5 trillion. Just the interest payment on the debt will be $1.2 trillion this fiscal year ending in October. By 2035 it’s projected that just the interest on the national debt will be $6 trillion. This far exceeds the total federal tax revenue for 2024 which was $4.5 trillion. What does all this tell us? That the federal government is on a slide to fiscal bankruptcy that is growing more inevitable every year. The analogy with personal finances would be owing money, say to credit cards companies, where the total interest paid each month more than exceeds one’s monthly income! Clearly, this is unsustainable.
As far as the annual budget option is concerned, in 2024, the federal government spent $1.8 trillion more than it took in in revenue. The budget being considered for this fiscal year will likely have a deficit of similar size. Applying any savings found be DOGE to this year’s budget would seem to help, but only if the politicians can be trusted to not spend more since they will have more to spend. Given their track record, I am not optimistic they would do the right thing.
Lastly, giving a refund back to the people sounds good but in many ways is fraught with problems when deciding who should get the refund and how much. Generally, only about 50% of workers actually pay federal income tax. Also, the amount of tax paid varies considerably. So, would it be right to grant, say, a refund of $5,000. to all workers when they vary not only in how much federal tax they paid to begin with, or whether they paid any at all? Sorting this out would be complex indeed. It is also likely, that infusing more cash into the system will result in higher inflation, which we must not allow to happen.
Since the crisis facing our country is the national debt, it seems to me that the best strategy would be to directly apply any savings found by DOGE directly to reducing the federal debt. It would be equivalent to the example of the person with excessive credit card debt applying some windfall to paying the credit card off or rather taking the money and buying more things. We need to face up to the crisis of the national debt and the best way to do that is to apply any and all savings identified by DOGE directly to reducing that debt. This will show our citizens and the world that we are actually serious about solving the federal debt crisis.