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The U.S. Budget Process is Broken - Here's How to Fix it [1]

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Date: 2025-03-27

March 27, 2025

By: Steven Zecola

Introduction

America’s budget process is fundamentally broken — and today’s political leaders are failing to fix it. For decades, both parties have contributed to an unsustainable fiscal path: Republicans push for tax cuts without cutting spending, while Democrats expand social programs without raising taxes to pay for them.

The result? A national debt that now exceeds $34 trillion, increasing by $1.8 trillion each year. Our system lacks meaningful checks and balances, and the public has been left out of the conversation. Early signs suggest that the 2025 federal budget will only make matters worse.

Where We Stand Now

The problems we face are neither new nor unique to the United States — but our handling of them has been less responsible than that of our global peers.

Fiscal Management in the World’s Top 10 Economies:

Country GDP ($T) GDP per Capita ($) Tax Revenue (% of GNP) Defense Spending (% of GDP) Healthcare (% of GDP) Cumulative Deficit per Capita ($000) U.S. 25.43 89,678 28% 3.4% 17% 122 China 14.72 13,872 20% 1.7% 5% 83 Japan 4.25 35,611 33% 1.0% 11% 255 Germany 3.85 87,914 39% 1.5% 13% 63 India 3.41 2,937 12% 2.4% 3% 82 U.K. 2.67 54,280 34% 2.4% 11% 97 France 2.63 49,527 46% 1.6% 12% 111 Russia 2.24 15,077 23% 5.9% 7% 15 Canada 2.16 55,800 33% 1.7% 11% 108 Italy 2.04 41,714 42% 1.2% 9% 135

The U.S. leads in overall GDP and GDP per capita. But we also spend more on healthcare and defense than most peers, while collecting less in taxes as a share of national income. The result is predictable: we borrow more — roughly 14% more than the Top 10 average — to cover our deficits.

And for what return? The U.S. does not rank in the top 10 for life expectancy, public safety, or cybersecurity — key indicators of national well-being. In other words, we’re spending more and getting less.

The Path Forward

With an annual deficit of $1.8 trillion and total spending near $7 trillion, the magnitude of mismanagement is staggering. This will take years of disciplined action to correct.

❌ What Not to Do

Avoid more tax cuts. The Bush and Trump tax cuts failed to deliver promised economic growth and added trillions to the deficit. Don’t scapegoat federal employees. Total federal payroll is only $260 billion — under 4% of spending. Firing workers indiscriminately, as some suggest, won't solve our budget problem. In fact, cuts to oversight roles like IRS agents and Inspectors General could increase the deficit by enabling fraud and waste. Don’t slash defense. Military spending is a public good with high return. Aside from addressing fraud, defense funding and personnel should be preserved. Don’t break promises to seniors. Any Social Security reforms should exempt those over 55 — meaning changes won't impact the deficit significantly in the short term.

✅ What We Must Do

There are only two credible paths to long-term fiscal prudence: increased tax revenues and major healthcare reform.

Raise taxes strategically. Phasing out the Bush and Trump tax cuts over ten years could cut the deficit by more than half, without harming economic growth. This is a reasonable, responsible starting point. Fix healthcare inefficiency. The U.S. spends far more on healthcare than other nations yet ranks poorly in health outcomes. The answer isn’t reduced headcount or less research — it’s smarter policy. We must restructure the Department of Health and Human Services to focus on the largest cost driver: patients with multiple chronic conditions. Targeting this area could reduce the annual deficit by $1 trillion or more.

For example, the Rand Corporation published a study in 2017 entitled “Multiple Chronic Conditions in the United States” which found that the relatively small population of patients with 5 or more chronic diseases incur more than 40% of all health care costs. The authors received no feedback or inquiries from any of the employees of the Department of Health and Human Services. This is not surprising given that HHS is not organized by disease, nor is efficiency or cost containment a sought-after objective.

As a patient with multiple chronic illnesses, I have not witnessed any coordination among my doctors. Even a relatively simple tool such as a shared patient portal is not available.

A System in Need of Guardrails

No budget plan — no matter how well-designed — will succeed without a mechanism for discipline. The simplest and most effective solution is this:

Require the Federal Reserve to review and approve the federal budget before it becomes law.

While Congress will still draft and debate the budget, the Fed — as an independent body — can serve as a nonpartisan safeguard to ensure that any budget passed aligns with long-term economic sustainability.

Congress has the ability to add this safeguard to the process. If it does not occur, the people can demand it via an amendment to the Constitution.

Conclusion: Time to Act Like Grown-Ups

Our current path is reckless, unsustainable, and unworthy of a nation that leads the world in innovation and productivity. The U.S. cannot continue to borrow blindly, spend inefficiently, and avoid responsibility.

Fixing the budget process is not about politics — it’s about planning for a better future for both red and blue constituents.

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