Press Release
October 22, 2024
The AAF Plan to Address the Nation’s Debt Challenge
The U.S. Department of the Treasury recently released its final Monthly Treasury Statement for fiscal year (FY) 2024, showing a $1.8 trillion budget deficit for the year. Meanwhile, the national debt reached 98 percent of gross domestic product (GDP) and interest payments on that debt totaled $882 billion – more than the federal government spent on Medicare and national defense. In other words, the United States is effectively spending more on the past than on making productive investments in the future. To achieve the faster economic growth and significant deficit reduction needed to put the nation on a sustainable long-term fiscal path, the American Action Forum developed a framework that focuses on three core recommendations: entitlement reform, addressing global threats, and tax reform.
Key points:
- The United States faces a litany of near-term budgetary and economic challenges and a fundamentally unsustainable long-term fiscal outlook, with the national debt projected to reach 166 percent of GDP by the end of FY 2054 under current law.
- Through a combination of revenue and spending changes, the AAF plan would save $7.1 trillion over the 2025–2034 budget window, enough to reduce debt to 95 percent of GDP by the end of FY 2034 and reduce budget deficits to below 3 percent of GDP.
- Over the long term (2025–2054), the plan would save $79.9 trillion and reduce debt to 67 percent of GDP by the end of FY 2054 while running a modest budget deficit of 0.4 percent of GDP.