Paying for it, without austerity.
Interest on the debt is now one of the biggest lines in the budget, and it grows on autopilot. Ignore it and it eats the agenda; panic about it and you cut the floor. There's a third option, and it's the boring correct one.
The United States doesn't have only a spending problem — it has a revenue problem it chose, through two rounds of tax cuts that never paid for themselves. The fiscal answer isn't austerity (which shrinks the economy you're trying to fund) and isn't “deficits don't matter” (inflation just reminded us they can). It's a durable revenue floor plus control of health costs, the one line that actually drives the long-run debt.
What this page argues
Treat the debt as a constraint to manage, not a cudgel and not a fiction. Net interest has climbed to roughly an eighth of federal spending — on par with the defense budget — and it compounds. So a serve-the-people agenda has to raise enough durable revenue to fund itself and keep interest from crowding out everything else.
The revenue is available without touching most people: restore more progressive rates at the top, close the loopholes that let capital income escape (carried interest, the stepped-up basis at death), fund the IRS to collect taxes already owed, and price carbon. And the single most important long-run move is on the spending side but is not a cut — it's controlling health-care costs, the real engine of the debt.
The same investigation, restaged one beat at a time. Step through it here, or present it fullscreen.
Paying for it, without austerity.
Interest on the debt now rivals defense and compounds on autopilot. The answer isn't austerity (shrinks the base) or 'deficits don't matter' (inflation disagreed) — it's durable revenue + health-cost control.
The record, claim by claim
Net interest on the debt has grown to roughly an eighth of the budget — on par with defense — and it compounds on autopilot.
FACTCBO and OMB figures show net interest costs rising to around 13% of federal outlays, a share that now rivals or exceeds national defense and is projected to keep climbing as debt and rates interact. Interest is the one 'priority' no one chose: it's the automatic bill for past deficits, and left unaddressed it squeezes every deliberate priority. That is the honest fiscal fact the rest of the plan has to reckon with.
- Congressional Budget Office; Office of Management and Budget — net interest as a share of federal outlays (~13%), rivaling defense and rising
The US has a chosen revenue problem: two rounds of tax cuts widened deficits, and 'tax cuts pay for themselves' is false.
FACTFederal revenue as a share of GDP runs low by the standards of peer democracies, and the gap is a policy choice: the 2001 and 2017 tax cuts both enlarged deficits rather than generating the growth that would offset them. The supply-side claim that rate cuts finance themselves is contradicted by the actual scoring and the actual deficits that followed. Revenue is therefore a lever the country has deliberately kept slack.
- Congressional Budget Office; Treasury; Tax Policy Center — the 2001 and 2017 tax cuts widened deficits; US revenue/GDP is low among peer nations
A large amount of legally-owed tax goes uncollected each year, and funding enforcement recovers much of it.
PROBABLY TRUEThe IRS and Treasury estimate a 'tax gap' — taxes owed but not paid — in the hundreds of billions of dollars a year, concentrated among high earners and complex partnerships whose returns are hardest to audit. Restoring enforcement capacity collects revenue already legally due without raising a single rate. We grade this PROBABLY TRUE because the exact recoverable amount depends on how enforcement is targeted and sustained, but the direction — that under-funding the IRS leaves money on the table — is well-established.
- Internal Revenue Service / U.S. Treasury — annual tax-gap estimates (hundreds of billions); return-on-investment of enforcement funding, concentrated at the top
The biggest long-run fiscal lever is controlling health-care costs — a spending fix that isn't a benefit cut.
PROBABLY TRUEOver the long horizon, the dominant driver of projected federal deficits is health-care spending growth, not Social Security or discretionary programs. That means the most powerful deficit tool is the same one that improves people's lives: paying less for the same or better care through negotiated prices and lower administrative overhead — exactly the universal-coverage design this plan argues for elsewhere. We grade it PROBABLY TRUE because savings depend on design, but health-cost control, not austerity, is where the long-run math is won.
- See the plan's health spoke for the cost evidence (Cai 2020; even Mercatus conceded lower total spending)
- CBO long-term budget outlook — health-cost growth as the dominant long-run deficit driver
The counter-cases, and why they fall short
- Austerity now — cut spending to balance the books. Flawed: cutting into a weak economy shrinks the tax base you're trying to grow, and the cuts land hardest on the wellbeing floor. Austerity has a track record (post-2010 Europe) of deepening downturns and underperforming its own deficit targets.
- MMT / “deficits don't matter.” Flawed: the 2021–23 inflation was the live counterexample. There are real resource and inflation limits, and rising interest costs bind — a government that prints without regard to capacity gets the bill in prices. Deficits aren't always dangerous, but “never” is wrong.
- “Tax cuts pay for themselves.” Flawed: 2001 and 2017 both widened deficits; the growth needed to offset the cuts didn't materialize. Supply-side self-financing is a claim the receipts have repeatedly refuted.
Where the evidence is strong, and where it stops
- The interest fact is hard; the projections are softer. That interest now rivals defense is measured. How fast it grows depends on rates and growth, which no one forecasts perfectly. We lead with the measured share and treat the trajectory as a projection.
- The revenue mix is a real design choice. That revenue is available is well-supported; exactly which taxes, at what rates, with what distributional and behavioral effects, is genuinely debatable. We name the menu without pretending one blend is objectively optimal.
- Deficits aren't the enemy — structural gaps are. We're explicit that borrowing to invest can pay off, and that the target is the compounding structural shortfall plus interest, not a balanced budget for its own sake.
The line that decides whether the rest is affordable
Every other priority in the Pragmatic Policy plan has to be paid for, and interest is the meter running in the background. The argument here is that the country can fund a serve-the-people agenda and stabilize its finances at the same time — by collecting revenue it has chosen not to, and by controlling health costs rather than cutting the floor. Austerity and magical thinking are the two ways to get this wrong; this is the way to get it right.
Questions worth taking seriously
Isn't the debt already so big that nothing else is affordable?
The debt is a real constraint, but “unaffordable” is the austerity framing. The country runs low revenue by peer standards by choice, so there's room to raise durable revenue at the top and by collecting what's owed; and the biggest long-run driver is health-care cost growth, which universal coverage can bend down. You manage the debt with revenue and cost control, not by canceling the things that make life better.
Won't taxing the rich just make them leave or stop investing?
The strongest version of this worry is about behavior at the extremes, and it's why the design matters — broaden the base and close loopholes (carried interest, stepped-up basis) rather than rely on eye-watering headline rates. Much of the available revenue is simply collecting taxes already legally owed by funding the IRS, which changes no one's rate at all. The “they'll flee” claim is real at the margin and overstated as a veto.
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The record
- Congressional Budget Office & Office of Management and Budget — net interest as a share of outlays (~13%), and the long-term budget outlook (health-cost growth as the dominant driver)
- CBO, Treasury, Tax Policy Center — deficit effects of the 2001 and 2017 tax cuts; US revenue as a share of GDP vs peer nations
- Internal Revenue Service / U.S. Treasury — the annual tax gap and the return on enforcement funding
- This plan's health spoke — the total-cost evidence (Cai 2020; even Mercatus)