Smarter spending can solve our debt crisis and open new doors
Read Part 1 (Spending Less, Gaining More: Lessons from Canadian Debt Reduction) and Part 2 (New Zealand Cut Spending and Came Out Ahead) of this series.
In recent months, concerns over America’s rising debt have crept into mainstream conversation across both sides of the aisle. Of 1,512 respondents to a recent Economist/YouGov poll, 71 percent expressed concern about the size of the federal budget deficit. U.S. business leaders are worried too, and for good reason: Our climbing debt has alarming ramifications at both national and individual levels. As fiscal pressures grow, the United States should treat rising debt as a policy challenge that demands serious, strategic spending reform—not just rhetoric or cosmetic cuts.
Despite growing awareness, Congress continues to pass legislation that adds to the debt. The One Big Beautiful Bill Act (OBBBA) is a prime example. According to the Congressional Budget Office (CBO), the OBBBA will increase borrowing by an estimated $4.1 trillion through 2034. (See the breakdown here.) Even the traditionally fiscally conservative Republicans who pushed the bill through Congress seem to have abandoned the fight for fiscal discipline.
In theory, the introduction of the Department of Government Efficiency (DOGE) should have marked a shift toward fiscal responsibility. Instead, it revealed how unserious leaders are about reform. DOGE fell short on lofty spending cut promises, suffering major controversies and legal setbacks instead.
DOGE’s actions focused (unsuccessfully) on optics rather than economic substance, ignoring the systemic changes needed to slow spending growth. Cutting small but attention-grabbing programs might generate headlines, but it does little to stabilize the budget or improve how government functions. In fact, it may have even done the opposite. Effective reform requires reimagining government—an approach that has been successful abroad.
Both Canada and New Zealand successfully tackled fiscal crises through broad, thoughtful restructuring of government spending. In both countries, the majority of adjustments came from spending cuts, which tend to produce better growth outcomes than tax increases. Results included reduced debt, strong gross domestic product (GDP) growth, increased efficiency in individual sectors, and even positive environmental effects.
As a current example, Argentina is undertaking a major fiscal restructuring in response to a deep economic crisis. While it’s still early, initial results suggest that large-scale spending reforms are leading to real economic improvements. Argentina’s GDP grew 5.8 percent in the first quarter of 2025 compared to the previous year following a package of spending cuts. Time will tell whether this momentum holds, but it underscores what’s possible when a government acts decisively.
The United States has no shortage of solutions. CBO regularly publishes a compilation of budget options to reduce the debt. The Committee for a Responsible Federal Budget even offers a Debt Fixer tool to help users create their own debt-reduction plan. For their Solutions Initiative 2024, the Peter G. Peterson Foundation asked seven major think tanks across the political spectrum to develop long-term plans made up of specific policy proposals to address our nation’s fiscal situation in line with their priorities. Every organization, regardless of ideology, included large-scale spending reforms in its recommendations. Americans may debate which areas should be reduced, but with the federal government spending over $6 trillion annually, there’s no shortage of cuts to be made.
The problem isn’t a lack of ideas, it’s the absence of political will to implement any of them. Federal spending continues to grow disproportionately to revenues. Lawmakers on both sides continue to prioritize short-term wins over long-term stability, and efforts like DOGE distract from the structural problems that need attention.
Rather than seeing fiscal reform as a sacrifice, policymakers should see it as a moment to lead. When done right, spending cuts are about doing better, not less. Reforming programs that no longer deliver, consolidating duplicative efforts, and rethinking outdated bureaucracies doesn’t weaken the government, it sharpens it. Smart reform means doing more with what we already have, building a more accountable and responsive government that works better for everyone.
At some point, action will become unavoidable. Moments of fiscal urgency drove reform efforts in Canada, New Zealand, and Argentina; however, waiting for a crisis has its risks. If the United States waits until markets lose confidence, policymakers will face fewer choices and painful consequences. While we may not be in a full-blown crisis yet, warning signs are flashing. This should be a call to action, not to panic.
The better path is to act out of choice rather than necessity. The best time for reform is before a crisis forces our hand. By treating spending cuts as a strategic opportunity rather than a threat, the United States can redesign the public sector to be leaner, more resilient, and more responsible. Spending reform isn’t just possible, it’s powerful. And it’s time for leaders to embrace it.