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MAGA Republicans have tended to downplay the federal government’s annual deficit and debt. That’s a serious error because both threaten the nationalist and populist goals that are central to the MAGA movement.
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MAGA conservatives have many inclinations and priorities, but making America great again is by definition the movement’s central principle. Its criticism of the globalist economic order focuses on how America, as a great power, is weakened by the offshoring of key industries and by its enrichment of the already wealthy. Its criticism of the globalist internationalist order, whether rooted in multinational organizations such as the United Nations or the World Trade Organization or America’s vast web of international military alliances, stems from the belief that America’s freedom of action in pursuit of its own interests is constrained by its submission to or membership in these entities.
One might think the deficit and debt are tangential to these critiques. In fact, they are integral to them.
The federal government’s annual net borrowing decreases America’s ability to forge its own path internationally. First, over 30% of the debt held by the public is held by foreigners or, more problematically, by foreign governmental institutions. That gives those actors the ability to influence American interest rates and economic growth by their willingness to buy or sell U.S. bonds and bills. That, in many ways, is much more harmful to America’s freedom of action than is membership in institutions that often have little legal ability to constrict American behavior.
The annual interest payments these foreigners receive on their investments are also directly in conflict with MAGA’s goal to rebalance the global economic order. Over $285 billion in interest payments were sent overseas in 2025. That’s more than one-third of the total trade deficit in the same year, a total that President Donald Trump is on a mission to reduce dramatically.
The two figures are distinct but represent the same thing, an outflow of American capital to foreigners that contributes to their economic growth. If one wants to reduce the trade deficit, one should also want to reduce other outflows of American cash. Yet, MAGA nationalists are supportive of tariffs but make no mention of the debt and deficit.
Continued massive annual deficits mean the interest payments sent overseas will only grow. This year’s deficit is likely to be in the range of $1.7 to $1.9 trillion. With interest rates on federal debt averaging 3.36%, that means total federal interest payments on the debt should rise by $50 billion to $60 billion. If foreigners buy the same share of the new debt they currently hold, that means interest payments sent overseas will increase by $15 billion to $20 billion this year alone.
If the deficit continues to be this large and Trump succeeds in dramatically cutting the trade deficit, it’s possible that America will send more money overseas in interest payments than through trade deficits by the time he leaves office. That’s not MAGA.
Large deficits and debt also hurt economic populism at home. Debtors are necessarily dependent on their lenders. If the lenders want something, the debtor has to listen. MAGA populists want to decrease the power global financial markets have on economic decision-making, but that’s hard to do when those markets supply the money the government needs to keep its doors open.
Domestically held debt is owned by a variety of sources, many of which are not terribly problematic. Mutual funds and pension funds, for example, held about $5.3 trillion in federal debt as of March 2025. The Federal Reserve itself owns $4.5 trillion. It remits the interest payments it receives to the government and is unlikely to bite the hand that feeds it.
The rest of the debt, however, is held mainly by financial intermediaries such as banks and hedge funds or by wealthy individuals. The federal government needs these entities and people to continue to buy its bonds at a reasonable interest rate. That gives those people enormous potential influence on federal economic policy, an influence that one can be certain is not friendly to MAGA economics.
Wealthy individuals are particular beneficiaries of continued interest payments. The top 1% of American households own a bit over a third of all financial assets. If all Americans own about 70% of the publicly held debt, that means the wealthiest own, directly or indirectly through mutual funds or money market accounts, about 22% of the total. That proportionate share would mean they receive roughly $200 billion in federal interest payments annually.
Do you think the treasury secretary will think about what these people want when they call to talk economics?
Placing labor on a fairer footing with respect to capital is the central element of all strands of MAGA economic thinking. It’s hard to do that when the federal government is increasingly beholden to the owners of capital for its very survival.
We can’t do anything about the amount of debt held. That can only be reduced over time by running budget surpluses that allow debt to be retired as it matures.
Nor can we immediately move to enact a balanced budget. The deficit currently comprises about 6% of GDP. U.S. GDP declined only 4.3% during the Great Recession of 2007-2009. Eliminating an even larger amount in one year would create massive economic problems and likely lead to a recession at least as deep as that one.
MAGA conservatives can and should, however, strive to make significant steps in lowering the deficit each year. Reducing it by one-fourth each year, for example, would leave us well on the way to a balanced budget by the time Trump leaves office. That’s tough, but doable.
Implementing broad, stable tariffs is one way to do that. The Tax Foundation estimates that a 15% universal tariff would raise a net $2.2 trillion, or about 0.6% of GDP, over a 10-year period. Supplementing that with Trump’s larger tariffs on China and Chinese goods imported from other countries, in an attempt to avoid the higher tariff, would bring in even more.
Vice President JD Vance’s effort to reduce fraud is another way to cut the deficit. The Government Accountability Office estimates that about $180 billion in improper payments were made in 2025. That’s another 0.6% of GDP saved.
Getting to budget balance beyond those steps will require serious choices about what the government should do and who should pay for it. Keeping entitlements such as Social Security and Medicare on their current course means ever-rising spending, but there’s no political will to dramatically reshape those totemic programs in the way old guard conservatives want. Clawing back payments or increasing Medicare premiums for the wealthiest seniors could save a lot of money without causing political pain.
The same focus should be applied to other spending programs, too. Farm programs have long been sacrosanct, but the truth is most of the benefits flow to people who are already well off. Everyone wants to help veterans, but why do veterans who are not disabled receive monthly checks for medical conditions? Democratic Maine Senate candidate Graham Platner receives $60,000 a year in various disability payments stemming from his time in the military, yet he’s healthy enough to run for statewide office. Multiply that by millions of veterans, and you can see real savings.
MAGA Republicans should also look at creative ways to raise revenue, too. They should enthusiastically back the proposed new $130 annual federal charge on fully electric cars to make up for their failure to pay the gas tax that owners of traditional cars have paid for decades. Tesla drivers use the roads, too. Reducing tax deductions like the mortgage interest deduction for households in the top two tax brackets wouldn’t keep those people from owning homes, but would raise billions of dollars a year.
The bottom line for MAGA conservatives should be to apply the same principles of nationalism and a worker-focused economic policy to the federal budget. Do that consistently over a few years, and the federal budget deficit will decline dramatically, thereby increasing American sovereignty and enhancing American economic power. And isn’t that what MAGA is all about?
