The latest news highlights the recurring issue of the U.S. debt ceiling. With the national debt reaching its limit of $36.1 trillion, urgent measures are required to raise the ceiling in order to avoid a potential default. The back-and-forth process of raising the debt ceiling has become a common occurrence, often resulting in last-minute compromises and negotiations between political parties. However, the need to raise the debt ceiling underscores a more significant problem: the federal government’s financial insolvency.

Many people may question how a wealthy country like the U.S. can be considered broke. Despite having abundant assets that contribute to a high standard of living admired globally, the federal government continuously spends more than it collects in revenue. This deficit trend, which has persisted for over two decades since 2001, the last year of a federal budget surplus, is unsustainable. The mounting national debt now exceeds the country’s gross domestic product by more than 20 percent, a financial scenario that would lead a private company to bankruptcy, asset liquidation, or closure.

The federal government’s unique ability to create currency allows it to manage annual deficits by selling debt securities to individuals, corporations, and foreign countries. Over 22 percent of the U.S. national debt is owned by foreign nations, with Japan and China holding significant amounts. Lawmakers and government officials have established the Department of Government Efficiency to identify and eliminate internal inefficiencies, fraud, and wasteful spending. While this initiative is commendable, its implementation has not been successful and is likely to, ironically, cost taxpayers more than it saves.

The fiscal challenge confronting the federal government underscores the difficulty of balancing numerous worthwhile investments with limited revenue. This necessitates establishing clear priorities in federal spending. Proposed budget cuts to organizations like USAID could have long-term negative consequences, potentially exacerbating future deficits instead of producing savings. Similarly, reducing pediatric vaccine programs could lead to increased healthcare costs far exceeding the expenses related to their implementation.

A crucial area for review is the Social Security system, which operates on a “pay as you go” funding model. By removing the earnings cap and introducing additional contributions from high-income earners above a certain threshold, policymakers can ensure the system’s solvency. Addressing the rising interest payments on the national debt, projected to approach $1 trillion by 2025, requires proactive measures alongside potential economic changes like inflation and interest rate adjustments.

In essence, the prevailing financial challenges cannot be simply resolved through efficiency measures alone. What the federal government truly requires is a Department of Fiscal Responsibility to establish stringent standards for lawmakers to align spending with revenue. Collaborative bipartisan efforts, particularly in addressing Social Security reforms and interest payments on the national debt, are essential to improving the government’s fiscal health and sustainability. Prioritizing fiscal responsibility over government efficiency is essential to steering the federal government towards a more stable and secure financial future.