Advocates called on lawmakers to redesign the United States’ tax system on Thursday in order to address the rising national debt.
The national debt surpassed $39 trillion in March 2026, the highest ever recorded in United States history.
A group of financial advocates spoke to members of the U.S. House Oversight Committee in a roundtable on Thursday about ways to reduce the national debt.
Joshua Rauh, a senior economics fellow at the Hoover Institution, said the federal government’s biggest drivers in spending are Social Security, Medicare and Medicaid.
He said those three programs accounted for 49% of $7 trillion the government spent in fiscal year 2025. The Congressional Budget Office estimated that figure will rise to 58% by 2035.
“Congress should strengthen anti-fraud incentives, especially in Medicaid,” Rauh said. “States have to be held accountable for misspending federal money.”
William Beach, executive director of Fiscal Lab on Capitol Hill, applauded the Oversight Committee’s efforts to target fraud and wasteful spending over the last year. He also called on Congress to display greater unity in passing legislation to stimulate greater economic development.
“Find a few small things, get those on the books and say we’re intent on bringing that deficit down from six percent to something between three and four percent,” Beach said.
Rauh recommended the federal government distance itself further from state budgetary problems. He suggested Congress condition federal tax exemptions on adherence to certain pension funding standards.
“That should be paired with an explicit no-bailout provision of public pension plans to help protect the federal budget from state budgetary challenges,” Rauh said.
Doug Hultz-Eakin, president of the American Action Forum, said Congress should work to slow the growth of Medicare, Medicaid and Social Security. He said these programs are set to outpace revenue growth, unless Congress implements major tax reforms.
“You’re going to have to do some sort of major tax reform to grow as quickly as possible and raise the revenue that we need,” Hultz-Eakin said.
Rep. Rashida Tlaib, D-Mich., pushed back on the advocates’ calls for lower spending on social safety net programs. Instead, she suggested cutting wasteful spending from agencies like the Department of War.
The Department of War has failed every audit of its finances since 2018. Tlaib said that should raise red flags for lawmakers to push more responsibility on the agency.
“I think there is a culture that’s been there that I feel like leaves our service members aside,” Tlaib said. “It’s not our residents. It’s these contractors, it’s the healthcare industry that benefits the most from it being broken.”
Rep. Bill Higgins, R-La., said the best way to solve the national debt crisis is to incentivize economic growth. He also said Congress should seek to eliminate deficit spending.
“We’re a wealthy nation, we can sell 20-year treasury bonds,” Higgins said. “I think if we balance the budget, we’re within a few decades of being in the clear.”
The advocates also called for an overhaul of the country’s tax system. They said simplifying the tax code could also be a way to balance the government’s budget deficit.
“The cost of compliance with the federal tax is estimated at half a trillion dollars, so there’s potentially a lot of savings that they had there to improve it,” Hultz-Eakin said.
