{"id":616861,"date":"2026-05-01T08:08:22","date_gmt":"2026-05-01T08:08:22","guid":{"rendered":"https:\/\/www.newsbeep.com\/us\/616861\/"},"modified":"2026-05-01T08:08:22","modified_gmt":"2026-05-01T08:08:22","slug":"the-debt-crisis-congress-has-been-ignoring-could-cost-the-average-u-s-household-18000-a-year","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us\/616861\/","title":{"rendered":"The debt crisis Congress has been ignoring could cost the average U.S. household $18,000 a year"},"content":{"rendered":"

An excellent new study from the nonpartisan Brookings Institution provides an ultra-sobering view of the potential tax increase U.S. families face in taming the runaway debt and deficits<\/a> crisis that\u2019s been near-roundly ignored in Congress and the White House. We all know the hit to either incomes, shopping tabs, social programs, or a blend of all needs to be huge\u2014though the towering size of the numbers found in the report still deliver a gut punch. The revelation that rocked this writer: On the tax side, the sole solutions are sweeping increases across virtually all income levels. Squeezing extra revenue from the rich won\u2019t get close to getting the job done.<\/p>\n

The paper\u2014prepared by Jessica Riedl, Brookings budget and tax fellow\u2014runs 132 pages, and primarily comprises highly revealing charts and tables. It contains a wealth of data that show, for example, how much worse our budget shortfalls and long-term borrowing become<\/a>, versus the Congressional Budget Office (CBO) numbers required to follow only current law, if tax reductions in the One Big Beautiful Bill (OBBB) don\u2019t sunset<\/a> and get extended. That scenario\u2019s so likely that it forms a better, and more depressing, baseline. Other decks spotlight that we\u2019re running the biggest budget deficits in the OECD, and that debt per household stands around \u201cyou owe another mortgage you don\u2019t know about\u201d level of $235,000.<\/p>\n

I focused on numbers showing the revenue, over and above the CBO\u2019s 10-year projections issued in February, needed to stabilize federal debt to GDP at 100% by 2036, just where that ratio is projected to finish FY 2026. Keep in mind that load\u2019s still daunting. It\u2019s double the postwar average and the highest figure since a brief summit in 1946. Capping borrowing at that number will still saddle the nation with an immense interest bill that even now matches outlays for Medicare.<\/p>\n

The key Riedl table on the \u201cstabilization\u201d theme shows the projected contribution of 16 individual revenue-raisers toward notching the goal. All but three fall far short. For example, imposing a 77% estate tax and 8% wealth tax, two measures proposed by Sen. Bernie Sanders (I-Vt.), would in combination close just 18% of the gap. A 50% income tax rate on incomes over $200,000 for individuals and $400,000 for married couples gets the U.S. about a third of the way to victory. Put simply: Pounding billionaires, the rich in general\u2014or even just high earners and up\u2014won\u2019t work.<\/p>\n

But a triumvirate of regimes fit famed bank robber Willie Sutton\u2019s explanation of why he picked banks: That\u2019s where the money is. They\u2019re all taxes that target immense income bases. They would score using a formula that raises rates equally for all income groups, crucially including the middle class.<\/p>\n

The first solution: an across-the-board jump in income tax brackets. Raising the extra $2.6 trillion for the 2036 budget needed to lock debt to GDP at 100\u2014exclusively using that biggest of all today\u2019s revenue sources\u2014would require an increase of 12 percentage points. In other words, if your current average rate is 20%, you\u2019d be paying 32%. The second fix: adding 11.5 points to payroll taxes, currently 15.3% for most employees\u2014and also removing the approximately $180,000 income ceiling for the Social Security portion. The final big one is a value added tax, or VAT, a fiscal cornerstone of virtually all other OECD nations, though some deploy closely related national sales taxes instead. The U.S. is exceptional in never having either one. A VAT of around 30% would ring the bell. In setting that number, Riedl assumes that America would follow most of Europe in exempting the major \u201csocial goods\u201d: home construction, health care, and education. \u201cThey\u2019re a bigger part of the U.S. economy than in Europe,\u201d Riedl observes. \u201cSo we\u2019d need an even higher VAT rate than in Europe to collect the same percentage of GDP in revenue.\u201d<\/p>\n

Of course, the solution could be a mix of tax hikes from a number of categories. Or lesser bracket-lifting due to curbs to such programs as Medicaid, Medicare, and Social Security\u2014though virtually none of today\u2019s political leaders dare mention that course. Once again, what all the remedies that score have in common is that they cover wider waters versus narrow channels. It\u2019s mainstream Americans\u2014our nurses and teachers, construction workers and accountants\u2014that this government, because of its profligacy, must summon to pay the bill.<\/p>\n

So how much extra would the average household need to pay by 2036? By then, the U.S. is expected to have around 144 million households earning an average of roughly $119,000 (assuming a 3% yearly increase from 2026). Since our examples project that each tax\u2014income, payroll, or VAT\u2014solves 100% of the problem, the number\u2019s the same for each: $18,000 a year, or an extra 15% grabbed from the family\u2019s incomes, leaving less for dining out, taking vacations, and paying the mortgage.<\/p>\n

\u201cThe solution is that everybody pays, just like in Europe,\u201d says Riedl. <\/p>\n

The tax bell isn\u2019t just tolling for the rich. As the Brookings\/Riedl report shows, it\u2019s tolling for all Americans.<\/p>\n","protected":false},"excerpt":{"rendered":"An excellent new study from the nonpartisan Brookings Institution provides an ultra-sobering view of the potential tax increase…\n","protected":false},"author":2,"featured_media":616862,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[36],"tags":[28,101011,101,939,15492,2928],"class_list":["post-616861","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-debt-crisis","tag-economy","tag-finance","tag-government-debt","tag-national-debt"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/616861","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=616861"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/616861\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/616862"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=616861"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=616861"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=616861"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}