The presidential solution to taming the growing federal debt

If compound interest is the most powerful force in the universe, America is on the wrong side of it. At more than $36 trillion, the federal debt is high and growing faster than we can afford.

Interest alone will cost $1.2 trillion this year, adding substantially more to the debt. Unaddressed, this escalating debt spiral threatens both the financial system and basic government services that millions of Americans rely on.

The crisis stems from congressional incentives, which are no longer balanced by healthy checks from other branches.

Currently, congressional incentives are all geared for immediate local spending and not for long-term national health. Representatives are elected to represent local constituents, not national interest. With hundreds of lawmakers involved, no one can be held accountable for spending. And their short, two-year terms encourage immediate spending over long-term sustainability. Their incentives virtually guarantee budget failure.

The president, however, has a countervailing set of incentives. While representatives serve local interests, the president serves the country as a whole. While responsibility is diffuse in Congress, it is concentrated in the president. And while two-year election cycles pressure Congress to prioritize short-term spending, the president's four-year term and two-term limit prioritizes the long view. These institutional contrasts make presidents — not individual representatives — the natural focus of voter accountability for federal spending.

Yet, despite the president's implicit responsibility for national spending, the modern presidency's power to curb excess has been severely limited. Congress now only passes massive omnibus bills that bundle essential services with wasteful spending, often passed on the eve of a government shutdown. Presidential vetoes in these situations are political kryptonite.

There is, however, a straightforward solution: the use of presidential impoundment power. Most state governors can unilaterally cut spending through line-item vetoes and impoundment — the power to trim excess expenditures during budget shortfalls. Political pressure incentivizes governors to balance the budget by targeting wasteful spending while preserving essential services. Their success offers a proven model for federal reform.

State constitutions, like the federal one, grant legislatures the power of the purse, and governors routinely balance the budget without constitutional conflict. This reflects a fundamental principle: legislative approval sets spending limits but doesn't require every dollar to be spent. The power of the purse authorizes spending without demanding it.

The Constitution only says, “no money shall be drawn from the Treasury, but in consequence of appropriations made by Law.” Nowhere does it say that all approved money must be spent. Congress can write a check, but only the executive can cash it.

For almost two centuries, like governors, U.S. presidents wielded this power from 1801 until 1974, when Congress passed the Budget and Impoundment Control Act, removing the president's power of impoundment to implement savings.

Since then, the federal debt has ballooned from $0.5 trillion to $36 trillion — from 20 percent to 120 percent of GDP. In essence, every American man, woman and child now living owes $100,000 in national debt, courtesy of your Congress.

The solution lies in restoring checks and balances, through the presidential impoundment power which would provide a natural counterbalance to the institutional temptations of Congress to spend relentlessly and mortgage America’s future. This power would be authorized only when Congress fails to balance the budget, preserving legislative authority while giving voters a means to rein in spending.

Like state governors, presidents could surgically reduce wasteful spending while preserving vital functions. This approach is common across institutions: Budgets are not balanced by majority vote, but through executive action. There is no guarantee that the 535 members of Congress will approve costs that neatly add up to available revenue.

Only an executive has the power to do that.

The mounting cost of our debt grows exponentially each month, the unwelcome consequence of massive borrowing and compound interest. Yet a Madisonian solution lies within reach — namely, we can restore a vital check and counterbalance on spending to pull away from looming catastrophe.

Andrew C. Johnston is a faculty research fellow at the National Bureau of Economic Research and a senior fellow at the Civitas Institute.

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