Breaking the Cycle: Solving the National Debt Crisis

Rishabh "Rishu" Sheth
Anton Dimitrov

Policies

All figures are savings over a ten-year period, estimated with our proprietary Python model.

1. Repeal the One Big Beautiful Bill Act, reverting to the FY 2024 budget baseline to avoid adding ~$4 trillion in debt.

2. Limit annual defense spending growth to 1% (instead of inflation-level increases), saving ~$680 billion through 2035.

3. Repeal student debt cancellation and replace with the College Cost Reduction Act, saving ~$320 billion.

4. Expand Medicare drug price negotiation and cap private-sector drug price growth, saving ~$230 billion.

1. Wealth tax  of 2% on net worth over $50M and 3% over $1B, raising ~$3.08 trillion.

2. Raise the Social Security payroll tax cap while capping benefits, reducing the deficit by ~$1.15 trillion.

3. Adopt a progressive, bracketed corporate tax system, restoring the top corporate rate to 35% for billion-dollar firms, resulting in a ~$1.03 trillion gain.

4. Restructure federal income tax brackets, lowering rates for most Americans while increasing top rates, raising ~$660 billion in new revenue.

5. Raise the minimum international tax rate on foreign profits to 15–21% (GILTI reform), saving ~$630 billion.

6. Cap the pass-through business deduction for high earners, saving ~$550 billion.

7. Close the payroll tax loophole for self-employed individuals, saving ~$490 billion.

8. Tax capital gains and dividends as ordinary income for earners over $1M, raising ~$340 billion.

9. Implement a 0.01% financial transactions tax, raising ~$340 billion.

10. Restore the estate tax to 2009 levels (lower exemption to $3.5M; 45% top rate), raising ~$320 billion.

11. Extend and enhance IRS enforcement to reduce the tax gap, raising ~$280 billion.

12. Increase “sin taxes” on cigarettes and alcohol, raising ~$160 billion.

13. Increase corporate stock buyback tax to 4%, raising ~$90 billion.

14. Repeal fossil fuel tax breaks, saving ~$80 billion.

1. Implement national paid family and medical leave, costing ~$620 billion over ten years but boosting productivity and GDP.

2. Make community college tuition-free nationwide, costing ~$120 billion over ten years.

3. Establish universal Pre-K, costing ~$280 billion over ten years.

4. Provide universal free school lunches, costing ~$110 billion over ten years.

5. Invest $220 billion over ten years to build and support affordable housing, addressing the housing shortage and homelessness.

6. Expand legal immigration and create broader pathways to citizenship, net positive fiscal impact (instead of cost, this reduces deficit by ~$180 billion).

News

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Frequently Asked Questions

We're not asking anyone to trust us because we claim to have some sort of advanced economic and fiscal policy experience. We're asking them to verify what we've done. Every data point in this report comes from official government sources: the IRS, Congressional Budget Office, and Committee for a Responsible Federal Budget. We published our complete Python code so anyone can check our calculations or challenge our assumptions. If our methodology is flawed, economists and policymakers can show us exactly where. But so far, the math holds up. The real question isn't why listen to teenagers. It's why Congress, with unlimited resources and expert staff, hasn't produced a comprehensive solution when we did it in six months using publicly available data.

This is the criticism we hear most often, and it misses something crucial: the disconnect between what politicians say and what voters actually want. Yes, some will call policies like paid family leave or universal Pre-K socialist. But when you poll Americans without partisan framing, the numbers tell a different story. 70% of Americans support Medicare negotiating drug prices. 65% support higher taxes on wealth over $50 million. 60% support paid family leave. 58% support free community college. These aren't partisan numbers. They're American numbers. The problem is that most voters oppose these policies reflexively because their party opposes them, not because they've actually heard the policy explained. When you tell a Republican voter that paid family leave reduces turnover costs for businesses and keeps workers employed, or tell a Democratic voter that reforming student loan services rather than providing direct relief can have a greater positive effect, the partisan opposition often evaporates. People haven't rejected these ideas. They've rejected the caricatures of these ideas that partisan media feeds them.

The current polarization is real, but it's largely performative. Politicians on both sides benefit from appearing ideologically pure to their bases and donors. But that same polarization creates cover for bold action during crises. In 2008, a Republican president signed massive bank bailouts with Democratic support. In 2020, a Republican administration passed trillions in pandemic relief with bipartisan votes. When the crisis becomes undeniable, the polarization collapses because political survival depends on action, not posturing. We're not saying this will pass next week. We're saying that when Treasury auctions start failing and interest payments consume 20% of the federal budget, Congress will pass something in a panic. History shows this pattern clearly. Our framework gives them a ready-made, economically sound plan instead of whatever desperate measures they'd cobble together at 2 AM during an emergency. The question isn't whether polarization is real. It's whether we act premptively with a plan or with last-minute chaos when the crisis forces their hand.

We designed every policy with specific bipartisan framing because we understand the political reality. Republicans can support defense spending caps as eliminating waste and improving accountability. Democrats can support them as reducing military overexpansion. Republicans can support expanded immigration as solving labor shortages and boosting tax revenue. Democrats can support it as humanitarian and economically inclusive. The same policy appeals to different values depending on how it's presented. The socialist label only sticks when politicians allow it to. When you explain that paid leave costs $620 billion but saves more in reduced healthcare costs, lower turnover, and decreased welfare dependency, it stops sounding like socialism and starts sounding like smart investment. The framing matters, and we've provided that framing for every single policy in this plan.

Capital flight is a legitimate concern, which is why our proposal includes strict anti-avoidance measures enforced by the IRS. However, real-world evidence also suggests the fear is overstated. Massachusetts implemented a state-level wealth tax without seeing mass exodus of the wealthy. Other developed countries like Norway, Spain, and Switzerland have successfully maintained wealth taxes for years. More importantly, our framework has built-in redundancy. Even if 30-40% of projected wealth tax revenue is lost to avoidance, we can compensate by adjusting capital gains rates or corporate tax brackets. The system doesn't collapse if one policy underperforms. Right now, we collect zero from wealth taxes. Even $1.5-2 trillion over ten years is infinitely better than nothing. And the wealth concentration we're seeing today, where 735 billionaires hold as much wealth as 170 million Americans combined, creates fiscal imbalances that threaten economic stability regardless of how we feel about taxation.

They're ambitious but grounded in real economic trends. The 3.5% GDP growth reflects multiple converging technological revolutions: breakthroughs in quantum computing enabling new drug discovery and materials science, intelligence and automation technologies transforming productivity across industries, and major aerospace and defense innovations driving both commercial and government investment. The 4% policy impact growth accounts for the fact that tax compliance and enforcement improve over time as systems matures, as well as the return on the $1.35 trillion in investments. But here's what matters: we designed the framework to be robust even if these assumptions don't hold. If GDP growth is only 2% and policies achieve just 60% effectiveness (roughly $820 billion in annual deficit reduction instead of $1.36 trillion), debt-to-GDP still stabilizes. It just reaches 100% around 2038-2039 instead of 2035. The fundamental trajectory remains downward. We included the full code so anyone can adjust these parameters and test different scenarios. The key insight isn't that our exact numbers are guaranteed. It's that the debt crisis is solvable even under more conservative assumptions.

Solving the debt crisis doesn't mean eliminating deficits overnight. Doing that would crash the economy and trigger the very crisis we're trying to avoid. The goal is to break the cycle where debt grows faster than GDP. When debt-to-GDP falls from 124% to 99.8% by 2035, we're demonstrating to global markets that debt is shrinking relative to economic output. That's what determines fiscal sustainability and prevents rollover crises. It's about trajectory, not instant perfection. Think of it like treating a chronic disease. A patient with high blood pressure doesn't need it to hit 120/80 tomorrow. They need it moving in the right direction consistently. At 99.8%, we've crossed the critical 100% threshold that restores market confidence and prevents the debt spiral that leads to default. From that foundation, the momentum carries us toward 60% debt-to-GDP by 2050, the ratio economists widely consider optimal for developed nations. We're not claiming instant perfection. We're showing a realistic, achievable path from crisis to stability to long-term fiscal health.

The Congressional Budget Office has essentially two standard approaches for addressing the debt: gradually raise income taxes on everyone, or cut public services across the board. Neither is feasible in today's economy during a cost of living crisis. Raising taxes on working families who are already struggling to afford rent, groceries, and healthcare is political suicide. Cutting Social Security, Medicare, education, or infrastructure during a period when Americans desperately need those services is equally toxic. More importantly, neither approach would even benefit the politicians who implement them. In today's reelection-focused political environment, where congressional approval ratings hover around 20% and every representative faces a primary challenge, politicians optimize for short-term results that show up before the next election cycle. A plan that raises everyone's taxes or slashes popular programs guarantees you lose your seat in two years, long before any long-term fiscal benefits materialize. Why would any rational politician choose career suicide for a solution that won't even show results during their term?

Our framework solves this problem by providing policies that are politically viable because they actually help Americans rather than hurt them. We cut taxes for 73% of households while raising revenue overall. We invest in paid leave, education, and housing that improve quality of life immediately, giving politicians tangible accomplishments to campaign on. We eliminate government waste in defense and healthcare that voters across the spectrum hate. We close loopholes that only benefit the ultra-wealthy, which polls show Americans overwhelmingly support. Every policy is designed so that politicians can go back to their districts and say, "I made your life better while fixing the debt." That's the difference between our plan and the CBO's standard options. Theirs require politicians to inflict pain on voters and lose their jobs for the sake of fiscal responsibility. Ours lets them improve people's lives and get reelected while solving the same problem. The math works, the politics work, and the policies benefit Americans rather than punish them.

There's also learned helplessness across Washington. If politicians and staffers believe the problem is fundamentally unsolvable without destroying their careers, why take the risk? Our contribution isn't genius, and we didn't discover brand new policies. Every proposal in our report has been suggested before by someone. What we did was show they work together as a comprehensive system, each policy reinforcing the others to achieve $1.33 trillion in annual deficit reduction without requiring politicians to commit career suicide. Maybe no one bothered to model it this comprehensively before, or maybe they did and buried it because even with a good plan, implementation still requires more courage than most politicians have shown. We don't know. But we know it's solvable if they actually want to solve it, and we've provided a framework that makes solving it politically survivable.

Key Findings

The report details significant changes that must be made to government spending, tax laws, government investments, and income tax brackets.

Economic Impact

The report outlines the long term economic impact of these reforms up to the year 2035.

Policy Decisions

The reforms chosen were meant to be unbiased changes targeted towards the economic and social improvement of the United States.

Research Support

Information was gathered through a variety of government websites, online sources, and an in-house Python model meant to simulate the impact the reforms would have on the U.S. economy.

Societal Benefits

While not the main goal of this research paper, notable improvements in fields like child care, education, and affordable housing were made through the lens of the long-term economic benefits they would bring.

Future Outlook

The target of this research paper was to reach a national debt level that could be considered "stable". This level was determined to be 100% of GDP, at which point the danger of a debt rollover crisis would be reduced.

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