America’s $36 Trillion Debt Isn’t What You Think: Here’s the Real Story

When people talk about America’s national debt—now over $36 trillion—there’s a lot of finger-pointing. Some blame Social Security and Medicare, claiming these programs are draining the economy.

Others say it’s the billionaires and corporations that are getting a free pass when it comes to paying taxes.

But here’s the truth: It’s more complicated than either side wants to admit. The real story lies in how America collects revenue and spends it and it’s not as simple as cutting programs or raising taxes. Let’s break it down in a way that makes sense.

Why Does America Owe $36 Trillion?

Imagine your household is drowning in debt. You owe money on your credit cards, have a car loan, and a mortgage. What’s the first thing you’d do to fix it? Most people would say:

1. Cut back on spending.
2. Find ways to make more money.

Now apply that logic to America. Our government doesn’t just owe money to foreign countries like China or Japan. It also owes U.S. citizens, pension funds, and government agencies. So, why not simply spend less and collect more taxes? Sounds simple, right? It’s not.

Where Does America’s Debt Come From?

Let’s put the blame game aside and look at the numbers.

$7 trillion is what the government owes to itself. This is called intragovernmental debt. Think of it as borrowing money from one pocket to pay another. It’s like taking cash out of your savings to pay your bills.

$18 trillion is owed to U.S. citizens and entities. These are things like savings bonds and retirement accounts. Grandma’s savings bond isn’t the problem here—most Americans don’t even think of these as “bad debt.”

$7 trillion is owed to foreign governments and investors. Yes, countries like Japan and China hold a portion of America’s debt, but they’re not calling in those loans anytime soon.

Are Social Security and Medicare Really to Blame?

Here’s where things get tricky. You’ve probably heard people say, “Social Security and Medicare are driving the debt!” But that’s not the full story.

Both programs are funded directly from your paycheck. Every time you see FICA taxes on your pay stub, you’re paying into Social Security and Medicare. So, technically, these programs should be self-sustaining. But there’s a catch:

• Social Security is starting to pay out more than it takes in.
• Medicare costs are growing faster than the taxes collected for it.

While these programs aren’t the biggest culprits behind the debt, they do contribute to the shortfall. The real issue is that general tax revenues—like income taxes—are being used to cover the difference. In 2023, for example, Medicare was $400 billion underwater.

Military Spending and Tax Evasion

When people argue over America’s debt, they often overlook two massive contributors:

Military Spending

The U.S. spends more on defense than the next 10 countries combined. In 2023 alone, defense spending was over $850 billion. That’s roughly 12% of the federal budget.

Tax Evasion and Loopholes

The wealthy and big corporations are not paying their fair share. In 2021, billionaires like Elon Musk and Jeff Bezos paid little to no federal income tax. Meanwhile, corporations use loopholes to avoid billions in taxes each year.

Who’s Really Paying for This Debt?

Here’s the harsh truth: Every day Americans are footing the bill.

When billionaires dodge taxes, the government has to make up that money somewhere else. That often means:

• Raising taxes on middle-class families
• Cutting social programs
• Borrowing more money

Why Raising Taxes on the Wealthy Matters

Many people argue that raising taxes on the rich won’t solve everything. And they’re right—it won’t. But it will help close the gap.

In the 1950s, the top tax rate for the wealthiest Americans was 91%. Today, it’s just 37%.

Corporate tax rates have also dropped from 35% to 21% in recent years.

If corporations and billionaires paid even a fraction more, it could bring in hundreds of billions of dollars in revenue. That money could be used to pay down the debt or fund essential programs.

What About Cutting Government Spending?

Many people say, “Why not just cut spending?”

Well, here’s the thing: Most of the federal budget is mandatory spending. That means it’s legally required.

Here’s where the money goes:

• Social Security – 23%
• Medicare/Medicaid – 25%
• Defense – 12%
• Interest on the debt – 8%

The remaining 32% is discretionary spending, which covers things like education, infrastructure, and scientific research. So, even if we cut all discretionary spending, we’d still have a significant debt problem.

What Needs to Happen to Fix the Debt?

Here’s what most experts agree on:

• Increase revenue by closing tax loopholes for billionaires and corporations.
• Reform entitlement programs like Medicare to make them more efficient.
• Cut unnecessary military spending.
• Ensure U.S. businesses pay their fair share.

Debt Isn’t Just a Government Problem—It’s a People Problem

The U.S. government’s $36 trillion debt isn’t just a number on a spreadsheet. It impacts real people—your taxes, your retirement savings, and your healthcare.

The solution? It’s not about blaming Social Security or Medicare. It’s about holding the wealthy and corporations accountable for their share of taxes, reducing military spending, and ensuring that programs are sustainable for future generations.

America doesn’t have a debt problem because people rely on Medicare and Social Security. It has a debt problem because billionaires and corporations aren’t paying their fair share.