Contributor: Three Forces Fueling America’s 45-Year-Old Debt Addiction

In 1980, when Reagan became president, US public debt was over $712 billion (about $2.8 trillion in 2025) or nearly 25% of US annual GDP. Today, that number is less than $30 trillion, or about 100% of GDP. And as the federal debt grew 42 times over that period, the economy grew only tenfold. You cannot expand the numerator four times faster than the denominator for 45 years without incurring economic risk.

This is where we find ourselves. The United States is at peace and, despite President Trump’s claims, there is no national emergency. And yet we see debt as a higher share of GDP only in 1945, 1946, 2020 and 2021. Then, Republicans and Democrats knew to scale back. Now, debt explodes during emergencies and grows in times of peace.

In 1946, after World War II, debt-to-GDP was 106%. It fell to just 25% in 1980, not only because of inflation and economic growth but also because of real financial discipline. With the budget nearly balanced, the fruits of a growing private sector can actually ease the burden. At the beginning of the Reagan era, the order gave way to a new normal of chronic budget deficits.

Three forces made change possible:

First, and the main reason for the mess we’re in, is that the state of entitlement has grown so large, it’s still unclear. social security reforms 1983 is a rare example of bipartisan structural reform of a major entitlement program in US history. Since then, despite the economic and social changes, the program has at all corrected. Never mind that it comes across insolvent And the potential for auto profit cuts of more than 20% by 2033. This is also true of our other major debt driver: Medicare. And Medicaid is growing far beyond its original intent.

Democrats, sometimes aided by Republicans, have worked to expand welfare programs for low-income people in higher and higher income brackets. The most recent and egregious example is the COVID-era expansion of Obamacare tax credits for wealthy taxpayers, a significant portion of whom are enjoying early retirement. Struggle to keep it going what is It’s about a government shutdown.

Second, Republicans discovered that promising tax cuts without spending cuts was politically painless as long as someone claimed they were “paying for themselves.” There is one rare and recent exception: this year’s “One Big Beautiful Bill,” which includes $1.5 trillion in spending over 10 years to cut some taxes. It’s not enough, but it’s something. Meanwhile, Democrats like to claim that the debt won’t be a problem if the rich pay their “fair share.” They already pay a huge amount in taxes. But the numbers still Do not add.

Finally, the Federal Reserve, which began in 1987 under Chairman Alan Greenspan, learned how to feel the political pain of budget deficits by keeping them artificially low and paying off debt. Politicians concluded that they could finally borrow without suffering the political consequences. The problem is that it only works because investors don’t have to worry that they will be repaid with inflation-adjusted dollars.

That fantasy is gone. There are interest charges lifted up From $372 billion annually just a few years ago to nearly $1 trillion today, what we spend on defense or Medicaid. Within a decade, annual interest payments are projected to nearly double, reaching $1.8 trillion. Even without new programs, the deficit will continue to grow and hinder economic growth. And Washington continues to run more deficit spending.

This decade’s two-pronged Benj owes its way 166% of GDP by 2054. I don’t think we’ll ever actually get to that point, because inflation will collapse and debt will stabilize. This will destabilize the country and cause a lot of pain and loss of purchasing power. So, my point remains: Politicians on the left and right watch the debt grow and do nothing.

The current politics of this crisis is as bipartisan as its origins. Democrats defend every right and dream of new interests. Republicans are calling for more defense spending and more tax cuts. Both claim that rapid growth will somehow eliminate math, but growth alone cannot close such a large structural gap.

Even continuing 3% real annual growth—a questionable assumption given the effects of an aging population and the effects of the fight against immigration—would generate about $4.4 trillion in additional revenue over a decade, while the total deficit would be $21.7 trillion.

Don’t be fooled: The debt explosion isn’t through waste, fraud or foreign aid. Nor is it the result of a reduction in revenue. This is a direct result of careless commitments to retirees, the cost of health care and an unwillingness to pay the bills honestly. For most of American history, debt fell when wars ended and peace returned. Since 1980, we have managed the opposite: peace without wisdom and prosperity without comfort.

Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University. This article was produced in collaboration with The Creators Syndicate.