A thought experiment on how to fix the national debt problem

Planet Money

NPR

Business, News

4.6 • 29.8K Ratings

🗓️ 2 July 2025

⏱️ 26 minutes

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Summary

There's an economic fantasy you sometimes hear in D.C. It often gets trotted out when politicians are trying to add billions or trillions to the national debt. They claim that all the new spending will be worth it in the end because we will supercharge economic growth.

This fantasy recurs again and again, because economic growth is a potent force. Over the next few decades, tiny changes in how fast our economy grows could decide the fate of the federal government — whether we can bring the massive national debt under control or whether we spiral into a fiscal crisis.

Today on the show, we talk to three economists who have been sifting through the latest evidence. They're trying to figure out what the government could actually do to make the economy grow faster. Could we even grow fast enough to outrun our national debt?

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This episode of Planet Money was produced by Emma Peaslee with help from Sam Yellowhorse Kesler. It was edited by Jess Jiang. It was fact-checked by Sierra Juarez and engineered by Ko Takasugi-Czernowin. Alex Goldmark is Planet Money's executive producer.

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Transcript

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0:00.0	This is Planet Money from NPR.
0:05.4	The year is 2000.
0:08.1	The world has just survived Y2K.
0:11.0	Parents are lining up to buy Sony's new PlayStation 2,
0:15.0	and the hottest songs on the radio are from Destiny's Child and Christina Aguilera.
0:23.1	And nobody knows this yet, but it is the end of an era for the U.S. economy and for the U.S.
0:29.5	government. Because between 2000 and 2001, this will be the last time that the federal government
0:35.6	ever runs a budget surplus? The last time the government
0:39.1	ever collects more money in a year than it spends. Ever since then, for the last 25 years,
0:45.5	the U.S. has been adding to the national debt, borrowing money to pay for the wars in Iraq and
0:51.8	Afghanistan, to bail out the banks and other industries during the global financial crisis,
0:56.7	then borrowing even more money to pay for more tax cuts, to pay for the rising costs of Social Security and Medicare,
1:04.1	and more recently to pay for more economic stimulus during COVID.
1:08.4	That is how over these past 25 years, the amount of money the
1:11.6	federal government has borrowed from the public, the national debt, went from about $3 trillion
1:16.4	to almost $30 trillion. And right now, Congress is wrestling over a new budget that's expected to
1:23.1	add another $2 to $3 trillion to that debt over the next decade.
1:33.7	Now, there's no hard or fast rule for how much debt is too much debt, but at this point,
1:37.4	most economists say that we could be entering dangerous territory.
1:41.8	It used to be that the cost of borrowing all that money was pretty low because interest rates were low.
1:42.8	But now that interest rates have gone up,
1:44.8	more and more of the federal budget has to go to just paying the interest on all that debt.
	...

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