Can Anyone Solve America’s $40 Trillion Debt Problem?

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I mean, opening up a shop and giving away stuff for free.

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**Rachel Miro** (1:04)
This is Forum. I'm Rachel Miro, in for Mina Kim.
Maybe you've seen the news headlines about our spiraling national dead and thought, there is not enough coffee in the world to get me to click on that.
I can't promise this Forum segment won't hurt, but hear me out. It's not the math that's hard. It's the politics, which is why we brought in three eminent brains, all of whom can translate the economics of a $40 trillion debt for us and the politics. Fear not, dear Forum listeners, you are in good hands. We're here with Scott Horsley, chief economics correspondent at NPR. Scott, always a pleasure.

**Scott Horsley** (1:45)
Nice to be with you, Rachel.

**Rachel Miro** (1:46)
And we've also got Tal Smith, economics reporter for the business section of the New York Times. Tal, welcome.

**Tal Smith** (1:55)
Hey, it's great to be here. I'm psyched.

**Rachel Miro** (1:57)
Well, let's get started. Scott, walk me through this like I'm a golden retriever. What is the difference between the debt and the deficit?

**Scott Horsley** (2:08)
Well, the deficit is the difference between what the government collects every year in tax revenue and what it spends. Right now, it's about $2 trillion a year, more that we're spending than we are collecting in tax revenue. And so in order to close that gap, the government goes out and borrows money. And if you add up all the accumulated borrowing from the last 250 years, that's the debt.
It was about $20 trillion as recently as 2017, and it's now doubled to $40 trillion as of last month.

**Rachel Miro** (2:45)
Okay. Tal, since 2000, we have cut taxes tilted towards corporations and high earners four times. The two Bush tax cuts, the 2017 Trump tax cuts in his first term, and additional tax cuts in Trump's second term, President Trump's second term.
I know that this is a bipartisan problem with bipartisan causes, but is it fair to say that it's more bipartisan towards Bush and Trump, or is that just politics getting in the way of understanding this?

**Tal Smith** (3:25)
No, it's a good question. I think, and Scott is a great example of this, it's important to both recognize the bipartisan nature of any problem, but also when there are asymmetries, it's important to recognize and point out those asymmetries without fear or favor. And it's absolutely true that Republican administrations, the Bush administration, George W. Bush, did two massive tax cuts tilted towards corporations and the rich. Although there were also middle class tax cuts in there and tax cuts that held small businesses. And then Donald Trump in his first term, and now in his second term, has also passed multi, multi-trillion dollar tax cuts that are tilted towards the rich and corporations. Now, it's also true that the Obama administration decided to extend the vast majority of the Bush tax cuts under pressure from its moderate wing and from the very powerful wing of its donor class.
And that's part of what makes it bipartisan. And also the Democrats under Joe Biden in 2021 had a chance to, if they wanted to, take their slim majority, but majority nonetheless, and roll back not just the Trump tax cuts, but also roll back some aspects of the Bush tax cuts from long ago.
They declined to do that for many of the same reasons. And you can make political judgments, partisan judgments about whether those are good reasons or not. But that is, as you suggested in whole other conversation, what's important is to point out the mathematics of that. And the math is true that if you take away those four massive tax cuts since the turn of the millennium, we'd be in a very, very different fiscal situation. Now, again, without stepping on the toes of the rest of the conversation, there's actually a very active debate in the bond market on Wall Street about how bad the fiscal situation is outside of the inflationary aspects that we're dealing with right now, which may or may not be connected to the size of the deficit itself. But the core of your question is absolutely true, that our fiscal deterioration in terms of the mathematics comes from those four big sweeps of tax cuts, yes.