Alexander Hamilton once said, “A national debt, if it is not excessive, will be to [America] a national blessing.” Running a deficit and maintaining debt, when done prudently, can be a boon to the United States. In addition to providing the federal government with an additional source of short-term revenue, borrowing and paying back debt builds U.S. credit.

The current problem with the U.S. national debt is not in the absolute amount of debt, but rather the rate at which debt is growing in relation to gross domestic product. If the current rate of growth in debt is maintained, the United States will need to spend a larger percentage of the national budget servicing debt repayment, and this has the worrying possibility of crowding out other discretionary spending in the future.

The conservative solution for curbing the growth in the national debt recognizes that austerity can be harmful and emphasizes that raising taxes is also harmful to the well-being of the citizenry and economic growth. Accordingly, spending cuts should only be done in select areas that would result in minimal hardship to those dependent on government spending. Likewise, tax increases shall be eschewed, except as an option of last resort. The aim of this plan is to create the conditions for the growth in GDP to outstrip the growth in debt, so the ratio of debt to GDP shrinks. While this seems very limiting, there are many areas of governmental policy that can be adjusted to have an indirect, but manifestly positive, effect on revenues.

Firstly, free trade policies need to be rigorously pursued (such as the Trans-Pacific Partnership (TPP))—as free trade is an engine of economic growth. Additionally, these free trade agreements can be used by the United States to leverage other nations into adopting patent protections found stateside, which can help reduce healthcare costs as the United States will no longer be shouldering the costs of healthcare innovation alone. In addition to the TPP, a new free trade agreement could be pursued with a post-Brexit (i.e.: not European Union-affiliated) United Kingdom.

In addition to the free movement of goods, the free movement of people is instrumental in fueling economic growth. Immigration should be geared toward skill sets and merit, rather than the current system, where family connections are decisive. Undocumented immigrants who have committed no additional crimes should be brought out of the shadow economy through an earned legal status, and become taxpayers. The H1B visa program should also be expanded to bring in new talented workers to the United States.

Finally, government regulatory agencies, such as the Environmental Protection Agency, need to be forced to calculate the negative detrimental cost of a regulation on the economy. Some regulation is certainly warranted, but in many cases, various rules and regulations harm the economy more than they produce good in terms of achieve the desired goal. Deregulation will enable further economic growth. These non-budgetary policies will be a boon for revenues—as expanding the economy will expand the tax base in a rather proportional relationship.

In terms of areas of discretionary spending where significant savings can be had, the Department of Defense stands out. Given the importance that the United States has in maintaining global stability, it is ill-advised to scale back the current commitments of the United States in any appreciable sense. However, given the large budget of the DOD, it is inevitable that some contracts are not being negotiated as efficiently as possible, so a mandatory auditing of the DOD and adopting a policy of zero-base budgeting towards discretionary programs should eliminate waste and fraud.

Some cuts to entitlement spending are necessary, given the large portion of the budget that they occupy. Social Security’s retirement age needs to be gradually raised, and benefits need to be capped for certain high-income earners to ensure the program’s future solvency. Partial privatization may also need to be examined as a solution.

If such solutions outlined before are insufficient, tax increases may be necessary. Ideally, such tax increases would occur in areas where they can also reduce negative social externalities. Examples would include sin taxes on alcohol or cigarettes, or perhaps a nationwide gas tax (to combat the externality of anthropomorphic climate change). If such solutions are still insufficient, a nationwide, border adjusted, value-added tax would be a fallback option for raising large amounts of revenue in a fair manner.

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