America’s current debt is $37 trillion.
Out of that $37 trillion, roughly $8 trillion is owed to Japan, China, the UK, and other countries.
The remaining $29 trillion is held internally by American banks, institutions, citizens, and other domestic entities.
Here is America’s 2024 budget:
Revenue = $4.9 trillion
Expenses = $6.7 trillion
Deficit = $1.8 trillion
Out of that $1.8 trillion deficit, about $1 trillion goes toward interest payments alone.
So, we have to borrow $1 trillion just to pay interest on the debt every year.
Next year, we will have to pay interest on $38 trillion in debt.
As we borrow more and more, the problem compounds in a negative way.
Pretty soon, we may reach a limit on how much we can borrow.
We do not have an unlimited supply of buyers for our bonds.
There are only 195 countries in the world, and only a small group of countries hold a meaningful portion of our debt.
Japan, China, and the UK hold a large share of the foreign-owned portion.
If demand for our bonds weakens significantly, and if we cannot continue selling enough debt, the consequences would be severe.
How to Reduce the Debt
There are only a few broad ways to address the debt problem:
1. Reduce spending — Trump and Elon are trying to do this through DOGE.
2. Increase taxes — Trump is trying to do this indirectly through tariffs.
3. Decrease interest payments — In 2025, $9 trillion worth of bonds are expected to mature. If those bonds can be refinanced at lower interest rates, the government could save enormous amounts of money over time. But the Federal Reserve can reduce interest rates only when economic conditions allow it. Right now, the economy is not strong enough to make that easy.
Conclusion
Trump may try to reduce the debt by cutting spending through DOGE and increasing government revenue through tariffs.
But those moves could also create inflationary pressure and recessionary risks — especially when combined with government instability and unpredictability.
He cannot make an omelet without breaking a few eggs.
He may be heading in the right direction.
But will he succeed?
I hope so.
But I doubt it, given his four business bankruptcies.
