We Can’t Tax Our Way Out of This

When Congress has allowed the national debt to balloon to $38 trillion, eclipsing GDP and resulting in a downgraded credit rating for the wealthiest nation on earth, you have two options..

Option 1: Ignore it. That’s the choice the machine are making. Elite Political consultants and advisors say voters don’t care about the debt, career political operatives say no one understands the debt anyway, and candidates talk about everything except the debt. Option one: ignore it.

Option 2: Fix it. Although the possibility of doing so is bleak and there are economists who say we will never overcome the debt, none of them say we shouldn’t even try. Most agree we won’t see the problem fixed in our lifetime, but that we can set the nation on a path to fiscal prosperity and hope the generations after us maintain it. Option two: fix it.

As a voter and a citizen, I can understand the instinct to ignore it. We wouldn’t have to accept blame. Admit that we have asked our government to do too much. That we’ve been seduced by politicians promising sexy tax incentives. Or rallied by angry fist-shaking at the Muslims, the immigrants, and other baddies in the world. Ignore the debt and we won’t have to curb Social Security or Medicare. Ignore the debt and we won’t have to ask hard questions about government procurement processes, bloated budgets, and uncapped foreign aid. Ignore the debt and we can be mad about money going to Ukraine without really asking who’s money it is.

I understand we’ve been taught to ignore it by the very people who are running it up. Fulfilling promises to donors is expensive. Just like running campaigns is expensive. So, too, is building ballrooms, snatching Venezuelan Presidents from their beds, and funneling taxpayer dollars into defense industry companies through Ukraine, Iran, and Israel. It’s expensive out there for everyone. So we ignore the debt. But ignore it or not, in the back of our minds, we do realize it’s there.

Here’s the real talk: we can’t tax our way out of this. That is not a viable “fix it” option. Despite the “tax the billionaires” rhetoric, we cannot ever raise the money we need to fix this debt problem unless we address the spending first. 

There are three ways to fix this: 

1. Increase revenue
2. Decrease spending
3. Grow the economy.

Raising taxes and reducing spending don’t get politicians elected. In fact, it’s cutting taxes and increasing the spending that gets them elected, and since being elected is what they want, they keep spending. They try to grow the economy instead, which is great unless those tries include subsidies to insurance companies and banks or tariffs on everything from apples to iPhones.

We cannot tax our way out of this. Even if you elect every “tax the rich” candidate on the ballot, not only will the taxes never actually happen, but the total revenue generated by them wouldn’t fund the government for three months let alone address the debt problem.

We’ve had a debt-to-GDP ratio this wild before, following World War II. And we fixed it. Good fiscal policy and government restraint reduced that debt from 106% of GDP to just 23% over about two decades. 

Key points: We can reduce the debt. It will take time.

The most recent suggestions for reducing the debt have been to cut federal discretionary spending, which this administration has done largely in politically unfavorable programs that amount to about .03% of the overall debt. Yeah, not even 1%. If they were serious about cutting spending, they’d address Social Security and Medicare, the two biggest drivers of our national debt. But they don’t.

The other suggestion has been to tax more. Specifically tax the billionaires more. But our problem is a spending problem, not a revenue problem. Seventy one percent of our budget problems are spending problems, with just 29% being tax policy problems. Even remedying that 29% – developing a “PERFECT” tax code – would not generate enough to address the debt in a meaningful way. Any guesses on the likelihood of developing a perfect tax code?

Let’s remember why these solutions are popular. First, politicians cut spending on things that galvanize their base: foreign aid, membership in international organizations like WHO and the UN. That makes it look like they’re taking the debt “fraud, waste, and abuse” seriously without actually addressing real expenses.

Second, politicians initiate class warfare (as I wrote about here) to redirect our attention from their wasteful ways to the billionaires living bigger, better, more influential lives than the rest of us. That makes it look like we have a common enemy: greed. Even if those greedy billionaires are actually funding the very campaigns in which they’re being accused. Wink wink.

Politicians will tell you that you’re not to blame and that someone else will pay for this. They lie.

What Really Works

What actually works to address the national debt is to address its two biggest drivers: Social Security and Medicare. Social Security spent $1.575 trillion in 2025. The entire government spent $7 trillion and a full 22% of that was Social Security. We have to restructure Social Security. And we have to do it soon. We’re already borrowing $.15 on every dollar spent for Social Security. In 2032, it’ll be 100% borrowed money. We must have urgency around reforming Social Security.

Medicare is also a big expense. We spent $988 billion on medical insurance for retired people in 2025. That’s because health insurance is tied to employment and once you’re no longer employed, there are no open market insurers for you. We must decouple health insurance from employment. Additionally, healthcare and health insurance have become intertwined. We should be able to see a doctor without needing health insurance to do it. We must decouple health insurance from health care. As I wrote about here. Medicare is a failing program. It needs reform and ultimately needs to be discontinued responsibly, such that seniors are not left without access to affordable health care. 

Make no mistake, these are hard conversations. A lot of Generation X is having hard conversations with their Baby Boomer parents, but our politicians either aren’t willing to, or they’re Boomers themselves. 

Here’s the thing: when nearly half of all federal spending is going to programs that benefit elderly people, that is an intergenerational transfer of wealth: From the pockets of the young to the benefits of the old. And it’s got to stop.

We have to be honest about what is causing this debt.

I’m here to be honest.

We have to tell the truth about what we have to do to bring it under control.

I’m here to tell the truth.

We have to be willing to be unpopular when we say these things.

I’m willing to be unpopular.

We can reduce the debt. It will take time. And it will take hard conversations about what we actually expect our government to do. Do we expect it to run a retirement savings program for everyone? How will we fund that? Do we expect it to provide healthcare to everyone? How should we fund that? 

Or do we expect individuals and families to take responsibility for themselves? And do we expect communities to take responsibility for their neighbors?

Do we want government intervention in healthcare? We know government intervention distorts the market. Healthcare costs are largely set by what the government is willing to pay through Medicare and Medicaid. Market distortion is expensive.

Do we want government-funded social safety nets available to everyone and funded by the coercive means of taxation? We know standardized offerings by government leave much to be desired. Poverty alleviation programs often fail because they lack the ability to meet to each individual’s circumstance. If everyone received the same level of care, we’d see hospitals operating like primary schools. You wouldn’t treat cancer and diabetes patients the same, nor should you.

We have to have some hard conversations. We have to reform these very expensive programs. We cannot tax our way out of this. And while we may not have been the ones to cause fiscal disaster, by electing the same parties again and again, we are telling them with our votes to keep driving the bus right over the cliff to economic ruin.

We cannot generate enough revenue through taxation – no matter who we tax – to keep spending the way we’re spending. Let’s be honest with ourselves and each other.

Then, let’s roll up our sleeves and get to work:

1. Form a commission to make recommendations for reforms to Social Security and then agree to enact those reforms. (This is like the base closure commissions utilized once upon a time. Look up BRAC for more info.)
2. Form a “BRAC” to investigate and analyze the procurement process in Medicare and introduce reforms. Be transparent about lobbyists trying to stymie the process. 
3. Address fraud and abuse in both programs with meaningful reform.
4. End restrictions that stifle entrepreneurship in the health insurance market. 
5. End restrictions that stifle entrepreneurship in the health care market.

Once we show we’re serious about addressing our addiction to spending and our debt issue, America’s rating will improve. We want other countries to continue using the US Dollar as reserve currency, as it keeps our borrowing rates low and our prices stable. We must reform major areas of spending and the government procurement process. We must simplify the tax code. We need a Balanced Budget Amendment. We need to commit, as a nation, to fiscal responsibility before it’s too late.

If you read this entire thing and think, “Kasie said end Social Security and Medicare,” please read it again. If you think I’m threatening the Boomers and planning to take the programs upon which they depend from them, please read it again.

We have to be honest about things that don’t work and stop ignoring the biggest problem we have in this country: our national debt. Because we cannot tax our way out of it. No matter what the politicians tell you. 

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