Government shutdowns are just the tip of the iceberg: The real problem in the US is much bigger

More interest than military: America's debt is eating up the national budget

Debt has more than doubled in the last ten years, from $17 trillion in 2014 to $37 trillion in 2025. Simulations show that without targeted countermeasures, the American debt ratio could rise from the current 120 percent to over 170 percent of gross domestic product within ten years. A sustainable solution requires a comprehensive compromise that demands painful concessions from both political camps: tax increases and a reform of major social programs.

An analysis of the American national debt paints a picture of a nation on a fiscally unsustainable path. The debt of over $37 trillion and a debt-to-GDP ratio of over 120 percent are no longer mere abstract figures, but an acute burden manifested in exploding interest costs, which are already crowding out critical government investments in defense, infrastructure, and education.

The causes are complex and deeply rooted in the political and economic developments of recent decades. A historical pattern in which debt was primarily incurred in times of war and reduced in times of peace has given way to a new reality: a structural, permanent deficit. This deficit is driven by a fundamental asymmetry between automatically growing, legally mandated spending on social programs like Social Security and Medicare and a revenue side that has been systematically weakened by repeated, politically motivated tax cuts under administrations of both parties. External shocks such as the 2008 financial crisis and the COVID-19 pandemic acted as massive accelerants to this already precarious dynamic.

The consequences are serious. The interest burden has evolved from a passive consequence of debt to an active driver of future deficits, posing the risk of a self-reinforcing debt spiral. In the long term, lower economic growth, an erosion of living standards, and a weakening of the United States' global leadership are threatened if confidence in the US dollar as the reserve currency dwindles.

The greatest challenge, however, is political. The extreme polarization of the political system has paralyzed the ability to compromise and is leading to dysfunctional conflicts such as government shutdowns, in which the basic functionality of the state is abused as a political tool for pressure. A distorted public perception, fueled by misleading analogies and conflict-oriented media coverage, is hampering rational social discourse about the necessary adjustments.

Although a wide range of fiscal policy solutions is available—from tax reforms and spending cuts to structural adjustments of social systems—each individual measure is politically toxic. The analysis clearly shows that neither growth alone nor isolated savings will suffice. A sustainable solution requires a comprehensive compromise that demands painful concessions from both political camps: tax increases and a reform of major social programs. As long as the political will for such an act of public responsibility is lacking, the United States will continue to navigate a fiscal course that increasingly endangers economic stability and the opportunities of future generations. The question is no longer whether action must be taken, but when—and at what price.

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The American budget crisis: A structural problem beyond partisan blame

The current government shutdown in the United States highlights a fundamental problem that extends far beyond day-to-day political debates. With a national debt of $37 trillion and a debt-to-GDP ratio of over 120 percent of gross domestic product, the US faces an unprecedented fiscal challenge. This situation requires a nuanced approach that considers both current policy methods and the historical failures of various administrations.

The dimension of the American debt crisis

The frightening figures

The American national debt already exceeded the historic mark of $37 trillion in August 2025, significantly earlier than originally forecast. The Congressional Budget Office had predicted this threshold would not be reached until 2030, but the COVID-19 pandemic and the subsequent massive government spending programs significantly accelerated this development. The debt-to-GDP ratio now exceeds 124 percent of gross domestic product, a level historically reached only immediately after World War II.

These figures are not just abstract statistics, but have concrete implications for the American economy and society. The American government's interest burden is expected to reach $952 billion by 2025. Particularly alarming is the fact that these interest payments already exceed total defense spending, making them the second-largest expenditure item in the federal budget.

The interest rate spiral as a structural problem

The trend in the interest burden highlights the structural nature of the American budget crisis. While $345 billion had to be spent on debt service in 2020, this amount had already risen to $659 billion by 2023. This trend will continue to worsen in the coming years: Projections show that interest payments could rise to $1.8 trillion by 2035.

The interest burden is expected to rise from 3.2 percent of gross domestic product in 2026 to 4.1 percent by 2035. As a share of federal revenue, interest payments will rise from approximately 18.4 percent at the end of 2025 to 22.2 percent by 2035. This means that almost a quarter of all government revenue will have to be used for debt service alone, significantly limiting the government's ability to act in other important areas.

Historical Perspective of Government Shutdowns

The shutdown history under different presidents

Government shutdowns are not a new phenomenon in American politics. Since 1976, there have been a total of 21 interruptions in government funding. The distribution among different presidents is interesting: Ronald Reagan experienced eight shutdowns during his term in office, all of which were relatively short, with the longest lasting only three days. Jimmy Carter had to cope with five shutdowns during his single term in office.

Donald Trump, on the other hand, set the record for the longest shutdown in American history—35 days between December 2018 and January 2019—but not the most shutdowns overall. This longest shutdown cost the American economy at least $11 billion and resulted in the furloughing of approximately 800,000 federal employees, while another 420,000 were forced to work without pay.

The costs of political blockades

The economic impact of government shutdowns is significant and affects more than just the directly affected federal employees. The 35-day shutdown of 2018-2019 resulted in a permanent loss of approximately $3 billion in economic activity that was never recovered. Additionally, there were $3 billion in back pay costs for furloughed employees and $2 billion in lost tax revenue.

The societal costs are even harder to quantify: disruptions in food safety inspections, accumulation of garbage in national parks, closures of federal museums, and delays in processing tax returns are just some of the direct impacts on the daily lives of American citizens.

The role of previous governments

Failures of the past

A critical look at the development of the American national debt shows that the problem did not originate with the current administration. The debt has more than doubled in the last ten years, from $17 trillion in 2014 to $37 trillion in 2025. This development is the result of policy decisions by several administrations over an extended period.

The Obama administration did attempt to address the problem. In 2010, the Bipartisan National Commission on Fiscal Responsibility and Reform was established under the leadership of Erskine Bowles and Alan Simpson. This commission's goal was to develop bipartisan solutions to the fiscal challenges and bring the budget into primary balance by 2015. Although the commission developed constructive proposals, their implementation ultimately failed due to political resistance from both parties.

Structural deficits and political realities

The American budget problem has become a structural deficit that exists independently of economic fluctuations. Even without taking interest payments into account, the federal government spends more money than it takes in. This structural imbalance is further exacerbated by rising interest payments, leading to a vicious cycle of higher debt and rising interest costs.

Political reality shows that both Republicans and Democrats have historically tended to pursue their respective priorities without adequately considering the long-term fiscal consequences. Tax cuts were often implemented without corresponding spending cuts, while spending programs were expanded without adequate funding.

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The current political strategy

DOGE and government efficiency

The Department of Government Efficiency (DOGE), established at the beginning of the second Trump administration, aims to achieve $1 trillion in savings by modernizing information technology, increasing productivity, and cutting unnecessary regulations and spending. Under Elon Musk's initial leadership, systematic cuts were implemented across various agencies.

However, DOGE's track record is mixed. While the initiative has certainly identified and partially eliminated inefficient structures, the actual savings are disputed. Critics argue that many of the claimed $140 billion in savings are based on faulty calculations and obfuscations. Furthermore, some agencies have begun to rehire staff after the drastic cuts, calling into question the long-term effectiveness of the measures.

Economic psychology as a factor

The importance of economic psychology for economic success cannot be underestimated. Trust and confidence among the population and the markets play a crucial role in economic development. In this context, the determination to address structural problems can have positive psychological effects, even if the specific methods are controversial.

At the same time, radical and ethically questionable approaches risk undermining trust in the institutions. Balancing necessary reforms with maintaining democratic stability represents one of the greatest challenges.

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International comparisons and evaluations

Debt ratios in a global context

With a debt-to-GDP ratio of over 120 percent, the United States is significantly above the international average of 93.8 percent. This is particularly remarkable for a nation that enjoys special privileges as the issuer of the world's most important reserve currency. This special position allows the United States to borrow at comparatively favorable terms, but this should not obscure the fact that even these privileges have limits.

Simulations show that without targeted countermeasures, the American debt ratio could rise to over 170 percent of gross domestic product within ten years. Even with moderate assumptions about deficit and interest rate developments, the ratio would exceed 150 percent. Such developments could undermine international market confidence and lead to capital outflows and rising risk premiums.

Long-term impacts and risks

The displacement of other priorities

Rising interest payments are already leading to a problematic displacement of other government priorities. Money that must be spent on interest payments is not available for investments in infrastructure, education, research, or social programs. These displacement effects will intensify in the coming years and increasingly limit the ability of the American government to act.

Particularly problematic is that interest payments already exceeded both Medicare and defense spending by 2024. By 2035, they could approach the level of Social Security spending, the largest single item in the federal budget. This development fundamentally calls into question the prioritization of American politics.

Demographic and structural challenges

In addition to interest rate problems, the United States faces demographic challenges that place additional pressure on public finances. The aging population is leading to rising spending on Social Security and Medicare, while the labor force is shrinking relatively. This demographic development is exacerbating structural fiscal imbalances and making reforms even more urgent.

Possible solutions

Historical success models

History shows that the United States has been quite capable of successfully overcoming fiscal challenges. After World War II, the then-high debt ratio was brought back to a sustainable level through a combination of economic growth and moderate debt reduction. Similar successes were achieved in the 1990s, when even budget surpluses were achieved temporarily.

These historic successes were typically based on bipartisan compromises that included both spending cuts and tax increases. However, the political willingness to make such compromises has become significantly less in today's polarized political landscape.

Need for structural reforms

Long-term sustainable solutions require structural reforms on both the expenditure and revenue sides. This includes reforms to major transfer programs like Social Security and Medicare, which currently account for the largest share of the federal budget. At the same time, tax reforms are necessary that generate sufficient revenue without hampering economic growth.

Experience with fiscal commissions shows that cross-party committees can certainly develop constructive solutions. However, the political will to implement these proposals is often limited, as the necessary measures require unpopular cuts in the short term.

The limits of radical approaches

Risks of drastic cuts

While criticism of the inefficiency of the American federal government is partly justified, drastic and rapid cuts carry significant risks. The experience with DOGE shows that radical cuts can have unintended consequences, including the disruption of critical government services and the weakening of institutional capacity.

Critics warn that the DOGE cuts could ultimately cost more than they save by eliminating revenue-generating functions, reducing crisis and risk capacity, and reducing investments in science and research. A balanced approach that balances efficiency gains with preserving important government functions would be more sustainable.

Democratic legitimacy and institutional stability

The manner in which reforms are implemented is as important to a democratic society as their content. Radical methods that circumvent or weaken democratic norms and procedures can cause more long-term harm than the problems they claim to solve.

American democracy is based on a system of checks and balances that, while sometimes leading to inefficiencies, also protects against authoritarian overreach. Reforms must respect and strengthen this system, not weaken it.

Why blame won't solve the US budget crisis: Growth, discipline, reform – The roadmap for America's financial rescue

The American budget crisis is a complex, structural problem that has developed over decades and cannot be attributed to any single government or party. With a national debt of $37 trillion and annual interest payments already exceeding defense spending, the United States faces an unprecedented fiscal challenge that must be urgently addressed.

While criticism of previous governments for their failures is justified, simply assigning blame is not enough. What is needed are constructive, cross-party solutions that encompass both the expenditure and revenue sides of the federal budget. Past experience shows that such solutions are possible if the political will exists.

Current efforts to improve government efficiency are fundamentally welcome, but they must be carried out with caution and in compliance with democratic principles. Radical approaches risk doing more harm than good, especially if they undermine institutional stability and trust in democratic institutions.

Ultimately, solving the American budget crisis requires a long-term, strategic approach that looks beyond the next election cycle. Only through a combination of economic growth, structural reforms, and fiscal discipline can the US regain its financial stability and maintain its ability to act in response to future challenges. The time for half-hearted measures is over – the magnitude of the problem demands decisive but prudent action from all political forces.

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