America is on a diet that doesn't work

From the outset, the big difference between Donald Trump and the Democratic establishment was that the current White House chief did not hide the true state of affairs. With their Keynesian paradigm, Democrats have always considered more debt to be the solution to debt. Debt itself was not a problem.

Back in 2015, Trump based his campaign on the opposite belief that debt is a major problem that is stifling the US economy and making life difficult for ordinary Americans. At the time, he declared, "We are going to reduce our $18 trillion debt because, believe me, we are in a bubble." He did not hesitate to label America a nation of debtors and promised to solve the debt problem within eight years.

However, this did not happen. The situation has worsened. In 2015, the US debt reached $19.29 trillion, and American taxpayers paid approximately $450 billion a year to service it. Ten years later, the debt is approaching $38 trillion, and interest payments are expected to reach $970 billion. The cost of servicing the debt is thus vying for first place with military spending in the federal budget. And so debt is becoming an increasingly serious problem for America.

The US president may argue that he did not have a full eight years to resolve it, but even Joe Biden's Democratic administration did not solve the problem; on the contrary, it exacerbated it.

In absolute terms, Biden increased the US debt by $8.5 trillion during his four-year presidency, Trump by $7.8 trillion during his first term, and $2.2 trillion during his second term so far.

In relative terms, compared to the previous election period, Trump had the biggest jump during his first term at 39.2 percent, followed by Biden at 30.5 percent, and the current Trump at 6.1 percent for his first year.

However, it should be noted that this is only a very rough comparison, which includes many other factors besides monetary policy. For example, Biden borrowed at very favorable low interest rates and did little to address the huge US debt. Trump has to do something about it, but he has a much worse hand to play.

Constant attention to the problem

What cannot be denied about Donald Trump is his consistent identification of the problem. Since his first campaign, he has pointed out that the key to the solution is to balance the foreign trade balance, with an agreement with China playing a major role in this.

He concluded the first such agreement on January 15, 2020. It went down in history as Phase One. Trump, as is his custom, called it groundbreaking. The reality was more sobering. The agreement did bring some positive steps, notably a partial increase in Chinese purchases of American goods and some commitments in the area of intellectual property. However, it did not ensure a long-term reduction in the trade deficit or fundamental reforms in Chinese economic practices. During his second presidential term, Trump will clearly attempt to make amends.

Fulfilling campaign promises

Another characteristic that distinguishes Trump from mainstream politicians is his willingness to fulfill his campaign promises. Although he typically changes his mind and does about-faces during the implementation process, at his core he relentlessly pursues his goals. The economic part of his campaign had the main advantage of simplicity of communication. Trump's team was able to explain very clearly how he wanted to "make America great again." The recipe was essentially simple, but its implementation requires radical steps.

The plan can be summarized in three main pillars: cheap energy as a cure for inflation, deregulation as an engine of growth, and tariffs as a fiscal and geopolitical tool. Shortly after taking office, Trump also enlisted Elon Musk to add a fourth classic tool: significant cuts and reductions in the state apparatus. However, his mission ended in failure.

Not even one of the world's best managers was able to tame the hydra of federal spending. Trump quickly abandoned this option, doing so with his trademark ice-cold composure. His closest ally became persona non grata.

Trump thus returned to his original plan: to solve the debt "accounting-wise," i.e., through a faster economy and cheaper debt financing.

Current status of plan implementation

America is exceeding expectations on the first point—cheap energy. The price of oil, one of the few globally tradable commodities, fell by a significant 18 percent in 2025. Thanks to a combination of geopolitical maneuvering and support for domestic producers, Trump is pushing prices down even at a time when the dollar is weakening, which would otherwise naturally increase the price of commodities (see, for example, gold, which is being bought up massively by American funds as insurance against currency devaluation). At the same time, the decline in energy prices is offsetting the effects of tariff policy.

Inflation remains a key issue. Like the rest of the world, Americans were hit by a strong wave of inflation after COVID-19. Trump focused on this very sharply in his campaign. Current data show overall inflation at 2.7 percent and core inflation (excluding food and energy) at 2.6 percent.

With the Fed's 2 percent inflation target, it might seem that Trump has failed in this area. The opposite is true. Without his strict tariff policy, inflation would have been under control long ago. Moreover, the catastrophic predictions of some economists, who expected a second wave of inflation precisely because of tariffs, have not come true.

The second pillar—tariffs—has brought $264 billion into the state treasury. While this amount roughly corresponds to the entire federal expenditure on Medicaid [a government program in the United States that provides health insurance for adults and children with limited income, editor's note], or one-third of the defense budget, but compared to nearly $1 trillion in annual interest on the national debt, it remains fiscally secondary.

Moreover, tariff collection peaked in October and declined in November and December. It is not yet clear whether this is the beginning of a more sustained downward trend.

The third pillar—massive deregulation—is in full swing. In 2025, the administration is aggressively pushing for deregulation across federal agencies, including the "10 for 1" executive order [when issuing a new rule, at least 10 existing rules, regulations, or guidelines must be repealed, ed. note], weakening environmental rules, and centralizing technology regulations.

However, the economic impact will only be measurable in one to two years. Nevertheless, in its latest projection, the US Federal Reserve raised its GDP growth estimate for 2026 from 1.8 to 2.3 percent. It cannot be ruled out that expectations of a deregulatory effect contributed to this more optimistic outlook.

Donald Trump is flooding the political scene with executive orders, announcements, and interventions in trade and regulatory policy. He certainly cannot be accused of inactivity. Nevertheless, even at this stage, he has not been able to reverse the underlying trend in US public finances: federal debt continues to grow rapidly.

Tariffs have brought in extraordinary but limited revenues, and economic growth has improved the short-term outlook, but neither is enough to address the structural problem of the budget, in which interest costs and mandatory expenditures are growing faster than revenues. This makes it all the more interesting to see how this arithmetic mismatch will be offset by the president's plan to significantly increase defense spending after 2027.

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