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The cost to the U.S. government of servicing the $40 trillion national debt pile is not difficult to come by: The Treasury publishes its own data on interest payments. The costs to households and individuals are more difficult to pinpoint, but a new report from the Committee for a Responsible Federal Budget (CRFB) suggests deficit reduction is the key to solving<\/a> an affordability crisis.<\/p>\n Household costs have become a political lightning rod, both in the run-up to the 2024 presidential elections and again in 2026, ahead of the midterms. A July study from Pew Research<\/a> showed the economy was the top-of-mind issue for voters, with 29% saying they wanted to hear plans to address price increases from Congressional candidates. A further 15% said affordability and the cost of living, specifically, were the key issues for them.<\/p>\n The topic has become a problem for President Donald Trump, who is under pressure to normalize global oil supply chains, which are disrupted due to the U.S.-Iran conflict.<\/p>\n The CRFB suggests there is a solution to the affordability headache in the hands of Congress: addressing the national debt.<\/p>\n Fiscal discipline could aid the interest-rate-setting Federal Reserve in its inflation battle\u2014currently at 3.4%, well above its 2% target, the committee explains. \u201cWhen interest rates remain well above the zero lower bound and the economy is performing near its productive capacity, deficit reduction can reduce excess demand and slow price growth,\u201d it writes. <\/p>\n Deficit reduction would also boost supply, the committee argues, as it could reduce the \u201ccrowding out\u201d of private investment\u2014an idea sources previously shared with Fortune<\/em> on Treasury Secretary Scott Bessent\u2019s latest bond plan. <\/p>\n \u201cDeficit reduction can further reduce inflation by lowering self-reinforcing inflation expectations to the extent it reduces the likelihood that future policymakers will aim to inflate away the national debt,\u201d the committee added. <\/p>\n The committee also crunched the numbers on the savings per household if inflation\u2014and hence, interest rates\u2014came down: A 1.5 percentage point rate reduction would save a family\u00a0$5,800 per year\u00a0on a $500,000 mortgage and $500 per year on a $50,000 car loan.<\/p>\n Debt hawks argue the value of U.S. debt isn\u2019t their concern\u2014it\u2019s the country\u2019s debt-to-GDP ratio that is the source of alarm. A debt-to-GDP ratio shows the balance of how much a country has borrowed versus its growth, and therefore the risk attached to lending funds.<\/p>\n The U.S. debt-to-GDP ratio is now approximately 123%, with the Congressional Budget Office (CBO) estimating that stabilizing this figure would boost real per-person income growth by 10% over the next three decades, and more than 44% compared to a high debt scenario. <\/p>\n Using the CBO\u2019s modeling, the CFRB adds: \u201cTo put these numbers in context, income\u00a0per person\u00a0would grow by $46,500 over the next three decades\u2014in today\u2019s dollars\u2014with a stable debt, as opposed to $32,350 with rapidly rising debt. On average, people will thus enjoy $14,250 more annual income from stable debt\u2014nearly $36,000 per household\u2014as compared to rapidly rising debt.\u201d<\/p>\n Those on the more optimistic side of the debt argument suggest the U.S. debt-to-GDP ratio is healthier than that of other developed economies: Japan stands at around 207%, per the International Monetary Fund<\/a>, without a bond market meltdown.<\/p>\n Likewise, policymakers\u2014including the president\u2014suggest the U.S. can grow its way out of an imbalance<\/a>. \u201cThere\u2019s nothing magic about the $40 trillion number,\u201d Bessent said on\u00a0CNBC<\/em>\u00a0<\/a>last month, \u201cAnd we can grow our way out of that.\u201d<\/p>\n With the Treasury spending $3 billion a day in interest<\/a> on national debt, that growth will be welcomed as soon as possible.<\/p>\n<\/div>\n\nThe income factor<\/h2>\n