Op-ed: Restoring GDP growth the secret to taming national debt, but over time

Lost in the shuffle of competing claims about President Donald Trump’s “big, beautiful” bill is the nation’s poor investment in GDP in the past 25 years.

We’ve racked up $27.5 trillion in additional debt since 2000 while adding only about $19 trillion in GDP.

This means we would have been better off, GDP-wise, mailing an $83,333 check directly to all 330 million Americans (for a total of $27.5 trillion) compared to what the federal government actually did with this money.

Since 2000, the U.S. has had subpar GDP growth compared to what the country enjoyed in the 20^th century, despite regular stimulus tricks such as quantitative easing (increasing the money supply), large deficit spending and artificially low interest rates.

The economy used to routinely publish 3% to 4% GDP growth numbers – or more – on an annual basis, as recently as the 1990s. The Trump administration’s budget and other economic policies are trying to bring back GDP to these historical norms.

That’s the way Trump – a real estate investor who knows quite a bit about leveraging debt to make money – wants to eventually tame the national debt.

One of the most important inputs in our federal tax system involves GDP growth.

In the 1990s it averaged 3%. In the last 25 years, GDP has gone over 3% only three times, with just one time in the last 15 years, including 5.8% (2021) as we recovered from the COVID-19 lockdowns.

(Note: If you combine the lockdown contraction of -2.2% in 2020 and the growth of 5.8% in 2021, you still get an average of only 1.8% GDP growth after spending $11 trillion on stimulus.)

Back-of-the-envelope calculations, however, demonstrate if GDP growth from 2000 to 2025 averaged 3% annually, our national debt would only be $23.6 trillion versus the $36 trillion we have today.

It’s still not great, but the math is important going forward. A return to normal GDP growth rates can help the economy dig out from underneath the national debt over time. 

One way Trump is trying to do this involves increasing the amount of homegrown energy we use.  

Why is this important?  

Every dollar of energy we import reduces our GDP by a dollar, which reduces federal tax revenues by about $0.17 or 17%. 

This showcases the strategy behind Trump’s tariff policy: An import will either generate federal tax revenue through a tariff, or people will buy domestically and generate GDP, which will generate a federal tax revenue of about 17%. 

Notably, the Congressional Budget Office recently scored Trump’s tariff policies as creating $2.8 trillion worth of revenue over a 10-year period. 

However, let’s suppose tariffs create no revenue. Even then, the 3% annual growth we previously enjoyed is always going to be better than the 2% we’ve come to accept.  

But it can get even better. 

GDP growth rates topped 4-7% in the 1970s and 80s. We have good reason to believe we can regain this type of growth without igniting the inflation of that period. 

AI is expected to create productivity gains, adding 14.5% to GDP by 2030, PwC has estimated. That’s a lot of money compounded over time. 

Quantum computing similarly is expected to create about $1 trillion in value, with 250,000 jobs globally by 2030 and 840,000 jobs globally by 2035. 

Notably, productivity gains increase economic output substantially while helping combat inflation. 

While the U.S. and China are neck and neck in AI and quantum, the U.S. economy is well-positioned to take advantage of the gains they can deliver to GDP. 

Furthermore, Vice President J.D. Vance’s first comments to a European government audience recently weren’t about Ukraine, defense policy or even foreign policy; they involved the importance of AI to future economies, which leads us back to the national debt. 

Sure, cutting wasteful spending is important. But much more important is not repeating the mistakes of the past and squandering an opportunity to encourage economic growth.