Good questions, @vb_1lavya! I will try to answer them below:
These holdings are recorded as assets of the Trust Funds and liabilities of the Treasury, but when you consolidate the federal government as a single entity, these internal IOUs cancel out. From the perspective of the whole federal government, intragovernmental debt is just a transfer from one pocket to another; it does not change the government’s overall net financial position.
Intragovernmental debt is real as an accounting and legal liability within the federal budget, but it is “not real” in the sense that it is not a net claim on the government by outsiders and does not itself create market‑financing risk.
The author argues that the debt problem could, in theory, be resolved without raising taxes or cutting safety net programs—but only through decades of consistently balanced budgets. However, history shows that this is highly unrealistic. Every major economic shock, whether in 2000, 2008, or 2020, has required massive government spending to stabilize the situation. With the national debt already exceeding 120% of GDP, expecting uninterrupted fiscal balance for decades, without any major disruptions, is wishful thinking at best.
The current problem of national debt needs comprehensive look at the entire outlays, instead of only discretionary defense expenses. There are tons of inefficiencies in each and every area where government spends. DOGE initiatives earlier this year found many such inefficiencies in the system.
At the end of World War II in 1945, the U.S. had a debt-to-GDP ratio of roughly 120%. By 1981, that figure had fallen to around 30%. Those were the nation’s golden decades, marked by nominal GDP growth exceeding 10%, which played a pivotal role in reducing the debt burden to manageable levels. Today, with debt once again hovering around 120% of GDP, it’s unrealistic to expect meaningful debt reduction solely through cuts in discretionary defense spending, especially when GDP growth is projected at only 3–4% in the best-case scenario. Hence, more comprehensive approach to the problem is needed by drastically cutting the inefficiencies in all the spends in all departments.




