How to solve the country’s $34 billion debt problem – and why it’s so difficult

As the national debt has risen to more than $34 billion and continues to rise, Washington remains deeply divided over what to do about it.

Congress suspended the debt ceiling last year, which limits how much the Treasury can owe to cover government bills, but not without months of nasty partisan fights between both chambers over spending.

To prevent the government from defaulting on its debt, which was then around $31 billion, Congress eventually agreed on a plan to limit the government’s annual spending as part of a broader bill that , according to estimates, could reduce more than 1 billion dollars from deficits next year. decade.

Despite this agreement, the national debt is still on track to exceed $54 billion in the next 10 years, according to projections.

Here are some ideas lawmakers have proposed to reduce that number — and why it’s a problem.

Cuts to annual funding

House conservatives have been pushing for cuts to the government’s annual funding bills that go beyond budget limits agreed to as part of last year’s debt ceiling plan, drawing strong opposition from Democrats.

Despite limits negotiated by both parties under the agreement for fiscal year 2024, Republicans spent much of the year pushing for government funding at levels well below agreed-upon limits, with a sharp focus on non-defense funding. , critical to Democratic priorities.

After months of partisan bickering and internal conflict within the House Republican Party over spending, both sides finally agreed to a deal that set funding for fiscal year 2024 at levels more in line with the previous budget cap agreement. .

But there are still questions about the funding levels Republicans will seek when the GOP-led House begins crafting its government funding bills for fiscal year 2025.

Under the previous budget cap agreement, Congress agreed to limit government funding to about $1.59 billion for fiscal year 2024, without accounting for handshake agreements not reflected in the bill text that allowed additional funding for non-defense programs. That same budget deal also called for capping spending growth at 1% for fiscal year 2025.

In an interview with The Hill earlier this month, Rep. Tom Cole (R-Okla.), the newly appointed head of the House Appropriations Committee, said he doesn’t expect the party to “depart too far” from the top line number. negotiated as part of the bipartisan spending limits agreement last year.

But he also suggested there could be some slack in future negotiations with Democrats.

“Speaker Johnson has shown that he is capable of getting a few more concessions than even McCarthy could, so there may be some wiggle room,” Cole said.

Changes to rights

While many Republicans have focused their attention on cuts to the annual funding bills introduced by Congress as part of the appropriations process, others have emphasized the need for reforms to programs with funding that are not subject to the annual spending fight – particularly Security. Social and Medicines.

The two benefit programs are often seen as a third rail in Washington, making changes a heavyweight in Congress. But members on both sides have expressed support for exploring bipartisan reforms to ensure the solvency of the programs, as both face funding threats in the coming years.

Some Republicans have pushed for the formation of a bipartisan tax commission to resolve the issue because dollars allocated to both programs constitute a portion of the federal budget. That includes Cole, whose rise to the top of the powerful Appropriations Committee has sparked enthusiasm from other proponents of the boost.

“I think this will be helpful to the committee,” House Budget Committee Chairman Jodey Arrington (R-Texas) told The Hill earlier this month when asked about Cole’s promotion, noting that he “doesn’t is only an advocate of it, but the author of a commission itself.”

Cole also said earlier this month that he still thinks there is an opportunity for a commission.

“So if you’re not willing to do that, please don’t come and talk to me about a balanced budget, because we can’t get there that way,” he added.

Tax increase

In his budget released earlier this year, President Biden relied on tax proposals aimed at the rich to help reduce deficits and pay for investments in social programs.

The plan includes increasing the corporate tax rate, enacting a minimum tax on billionaires and quadrupling the tax on share repurchases.

Biden also proposed bolstering the solvency of the Medicare hospital insurance trust fund by increasing tax rates on Americans earning more than $400,000, increasing the capital gains tax, and eliminating tax subsidies for real estate and cryptocurrency transactions.

While the measures have support from Democrats, many of the tax proposals are considered a failure by Republicans, who argue that Congress should focus on cuts.