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2026-09-21 09:36:10
[US national debt surpasses $40 trillion: The solution lies in taxation, not spending cuts] (1) The US national debt has reached $40 trillion, but spending cuts cannot fill the gap. Healthcare costs about $1 trillion, and even if it is eliminated, it will only cover half of the deficit; Social Security costs $1.7 trillion and is rising; cutting all “wasteful” domestic agencies will only affect 13%-14% of the budget. Mathematics forces the discussion to shift to the revenue side. (2) Total federal spending in fiscal year 2026 will be about $7.7 trillion, of which 73% (about $5.6 trillion) is mandatory spending such as Social Security, Medicare, and Medicaid; discretionary spending is about $2 trillion, defense is about $900 billion, and other spending is about $1.1 trillion. (3) Interest bills are about $1.1 trillion and will worsen. The public holds more than $32 trillion in debt, and about one-third (more than $10 trillion) will mature and be refinanced in the next 12 months. The average interest rate is about 3.3%, currently 0.5-1.3 percentage points higher; for every 1 percentage point increase in interest rate, the annual interest payment will be 300-400 billion US dollars more. (4) The only credible solution is a tax that can truly generate revenue, coupled with reasonable reductions. Except for the United States, all developed countries levy value-added tax; exemptions for necessities can reduce regressivity, but will push up prices. (5) The standard objection is that value-added tax is easily aggravated by Congress; the analysis believes that it should be written into the guarantee clauses such as absolute majority, rather than inaction. The real choice is whether to design value-added tax now or to painfully liquidate it later. (6) Revenue estimates: under a broad tax base of 5% value-added tax, it will be about 350 billion US dollars in 2027 and 440 billion US dollars in 2034; under a narrow tax base, it will be 220-290 billion US dollars. At a 10% tax rate, the traditional method will reduce the basic deficit by about 1.6 trillion US dollars per year, and the dynamic estimate is about 1.3 trillion US dollars. The European average is about 21%, and the US 10% is half of that.
