A report published Wednesday from think tank Cato Institute finds that to maintain the 98% debt-to-GDP ratio figure that the U.S. hit in 2024, the U.S. would have to enact spending cuts or increase taxes equal to 2.87% of GDP, or about $827 billion. That’s close to the U.S.’s defense budget requests, which totaled $892 billion for fiscal year 2026, and $850 billion in fiscal year 2025.

The $39 trillion national debt is only expected to balloon even further. Last year, President Donald Trump raised the debt limit by about $5 trillion by signing the One Big Beautiful Bill Act (OBBBA). The bill also cut social spending as well, including on Medicaid and food stamps, but the U.S. is still expected to run a $1.9 trillion budget deficit. 

Now, the problem is multiplying as interest paid on the national debt is expected to hit $1 trillion this year, surpassing military spending and bringing the country dangerously close to entering a “debt spiral” as interest paid on the national debt is predicted to grow faster than GDP in five years. Higher debt and interest rates have worsened the country’s budget outlook. Because of that, Moody’s last year downgraded the credit rating of U.S. long-term debt.

How the debt compares to defense spending

Of course, the debt-to-GDP ratio in 2024 was lower than its 106% post-WWII peak, when military spending hit a record-high percentage of government spending. But William G. Gale, a senior fellow at the Brookings Institution and a co-author of the report, said there’s one lever the government pulled then that’s just not available today.

“What we did over the next 40, 50 years was cut defense spending from something like 9% of GDP,” he told Fortune. While defense spending has steadily increased over the past few years, it made up just 3.4% of total GDP in 2024 as the country’s economy has grown significantly since the post-war years. Gale said it’s just not possible to cut military spending at the same multiple percentage-point levels it had done so after the end of the war.

“We can’t do that again,” he said. “We can’t cut it from 3[%] to -3[%],” as defense spending can’t be a negative percentage of GDP, unless the government were to receive more profit from its military assets than it spends on them.

While it would fall short of solving the problem, cutting military spending would be a step in the right direction. But Trump just proposed the opposite: a $1.5 trillion defense budget for fiscal year 2027, a buildup that surpasses defense spending at other high watermarks of the post-WWII era, including during the Vietnam War and former President Ronald Reagan’s military buildup.

The new reality of tackling the debt

The only way to slow down the piling national debt is some combination of the most politically toxic proposals: tax hikes and spending cuts.

“We’re in uncharted waters,” Gale said. “We’re going to have to consider tax options and ways to slow the growth of spending.”

Trump has touted alternative mechanisms to tackling the debt, mainly his tariff plan, saying last year they “are helping to slash the deficit this year by more than 25%.”

But budget experts disagree with that claim. 

“As a revenue tool, they’re very weak,” Kyle Pomerleau, an international tax policy expert and a senior fellow at the American Enterprise Institute, recently told Fortune.

“They do raise some revenue, but just not enough to really move the needle one way or the other.”

The president has also bet on his “gold card” visas, originally pitched at $5 million but now priced at $1 million per applicant, which would offer immigrants fast-tracked citizenship.

“A million cards would be worth $5 trillion, and if you sell 10 million of the cards that’s a total of $50 trillion,” Trump said last year. “Well, we have $35 trillion in debt, so that would be nice.”

But the U.S. has sold just one card over the past year.