Keys to Fixing the U.S. Budget

I’ve just concluded two weeks of client briefings in Florida. We covered nine cities, spread across more than 700 miles. It was a challenging itinerary, but it was a treat to visit with so many clients and partners.

I did get a respite during a weekend in Key West, which features a buoy marking the southernmost point of the continental United States. I thought of that icon as I reflected on the fortnight of conversations. The most frequently asked question (by far) was how much further south the finances of the United States might drift in the years ahead.

We’ve covered some of the issues related to America’s fiscal crisis in recent months. (Two entries in that catalogue can be found here and here.) Clients raised some additional questions about the national debt, answers to which I thought it would be useful to share formally.

How did we get into so much debt? It is hard to recall, but the United States had a budget surplus in the year 2000. But rather than use the excess to retire debt or shore up Social Security, Congress chose to rebate the amount (and then some) to taxpayers and initiate new programs. That re-started the red ink, which has flowed freely ever since.

US Annual Deficit and Contributors to Growth in US National Debt


The Committee for a Responsible Federal Budget estimates that tax cuts and spending increases have added debt equal to 70% of gross domestic product (GDP) during this century. Had those measures not been taken, the national debt might have been retired by now.