I ASKED CLAUDE TO SOLVE OUR $37T DEBT

I asked Anthropics AI Model, Claude to solve our $37 Trillion debt. Then I asked Open AI’s ChatGPT what idealogical position Claude was taking.

ChatGPT labeled it as a “Centrist, Technocratic, Neoliberal, Social Democratic, institutionalist mixed economy fiscal plan”.. and gave me a one liner, “This is a centrist, pro-market, fiscally responsible reform blueprint—combining growth economics with progressive tax modernization and long-term entitlement sustainability”. Labeling it “evidence based”.

Here is Claude’s response;

“Claude Solves the 37 Trillion in Debt

A Complex Reality Check on America's Fiscal Crisis

Let me be direct: there is no painless solution to $37 trillion in debt, and anyone claiming otherwise is selling you something. But there are realistic pathways that combine economic growth, fiscal discipline, and strategic restructuring. Here's what a comprehensive approach would actually look like.

The Math We Can't Ignore

The debt-to-GDP ratio matters more than the raw number. At roughly 120% of GDP, we're in serious but not unprecedented territory. Japan operates at 260%, though their unique circumstances (domestic bondholders, different demographics) make direct comparisons misleading. Our real problem isn't the debt itself—it's the trajectory and the interest payments.

With interest rates normalized from their post-2008 lows, we're now spending over $600 billion annually just on interest. That's more than defense spending in some projections. This is the quiet crisis: debt service crowding out everything else.

A Four-Pillar Framework

Pillar One: Grow Into It (40% of the solution)

Economic growth is the most politically palatable path because it doesn't require explicitly taking things away. A sustained 3-4% real GDP growth rate would:

• Increase tax revenues without rate hikes

• Reduce the debt-to-GDP ratio over time

• Create fiscal space for strategic investments

This requires: infrastructure investment that pays returns, education and workforce development, immigration reform to address labor shortages, regulatory streamlining to boost productivity, and strategic industrial policy for competitive sectors.

The problem? We haven't sustained 3%+ growth consistently since the 1990s. It's necessary but insufficient alone.

Pillar Two: Revenue Modernization (30% of the solution)

Not "raise taxes" but "fix the tax system." The current code is riddled with inefficiencies that lose revenue while distorting markets:

• Close the carried interest loophole and treat all income more uniformly. Capital gains preferences made sense historically but now primarily benefit the top 1%.

• Implement a carbon tax starting at $40/ton, rising predictably. Revenue estimates: $1-2 trillion over 10 years while addressing climate externalities.

• Financial transaction tax on high-frequency trading (0.1% on transactions). Raises revenue while potentially reducing destabilizing speculation.

• Wealth tax or mark-to-market taxation on unrealized gains above $100M. Controversial but addresses the reality that billionaires can borrow against assets indefinitely while paying minimal income tax.

• VAT (Value Added Tax) like most developed nations. A 5% VAT could raise $3 trillion over 10 years.

Combined, these could add $300-400 billion annually without touching middle-class income taxes. The political challenge is immense, but the math works.

Pillar Three: Entitlement Reform (20% of the solution)

This is where politics kills policy. Social Security and Medicare are 40% of federal spending and growing. Without changes, both trust funds face insolvency within 15 years. Options that actually matter:

• Raise the retirement age gradually to 69 by 2040, indexed to longevity. People live 15 years longer than when Social Security was designed.

• Means-test Medicare more aggressively. Warren Buffett doesn't need subsidized health insurance.

• Allow Medicare to negotiate drug prices aggressively (already started but expand it). Potential savings: $200 billion over 10 years.

• Adjust COLA calculations to chained CPI, which more accurately reflects substitution effects.

• Raise the income cap on Social Security taxes from $168,600 to $400,000.

Each of these is a political third rail. Together, they're essential. The alternative is watching both programs collapse under their own weight, which hurts the vulnerable most.

Pillar Four: Defense and Discretionary Reality Check (10% of the solution)

Defense is $820 billion annually. We spend more than the next 10 countries combined. Strategic reductions are possible:

• Reduce overseas base footprint by 30%. We maintain 750+ bases in 80+ countries.

• Procurement reform to stop cost overruns that add billions to weapons programs.

• Audit the Pentagon (still hasn't passed one). Waste estimates run to $100+ billion annually.

But recognize the trade-offs: reduced global presence means reduced influence. Discretionary non-defense spending is already just 15% of the budget and includes things like the FBI, FDA, and national parks. Deep cuts here yield little fiscal benefit while harming government function.

The Interest Rate Wildcard

Here's what keeps Treasury officials awake: interest rates. Every 1% increase in average rates adds $370 billion to annual interest costs. The Fed's inflation fight in 2022-2024 dramatically increased debt service costs.

A realistic strategy requires:

• Extend debt maturity while rates are manageable. Lock in longer-term bonds even at slightly higher rates.

• Coordinate (carefully) with Fed policy to avoid fiscal-monetary collision.

• Build credibility through actual deficit reduction to keep borrowing costs lower.

The 20-Year Timeline

Year 1-5: Stabilization Phase

• Implement revenue reforms

• Begin entitlement adjustments with long phase-ins

• Target primary surplus (excluding interest payments)

• Reduce deficit to 3% of GDP

Year 6-10: Consolidation Phase

• Economic growth compounds

• Tax revenues increase from broader base

• Entitlement reforms begin showing savings

• Reduce deficit to 1-2% of GDP

• Stabilize debt-to-GDP ratio at 120%

Year 11-20: Reduction Phase

• Sustained growth reduces ratio to 90-100%

• Interest costs decline as % of budget

• Fiscal space reopens for strategic investments

• Create sovereign wealth fund with surplus revenues

The Political Economy Problem

The real obstacle isn't economics—it's politics. Every solution above hurts someone's interests:

• Tax reforms anger donors and lobbyists

• Entitlement changes mobilize seniors (who vote)

• Defense cuts face national security hawks

• Any pain now versus gain later loses elections

The solution requires what we haven't seen: a genuine bipartisan commission with enforcement mechanisms (like Simpson-Bowles should have been), combined with presidential leadership willing to spend political capital.

What Happens If We Don't Act?

The dystopian scenario isn't default—the US can always print money to pay dollar-denominated debt. Instead, it's:

• Debt spiral: interest costs consume 30%+ of revenue

• Crowding out: no money for infrastructure, R&D, education

• Inflation: printing money to service debt destroys the dollar's value

• Interest rate spike: loss of confidence forces higher borrowing costs

• Economic stagnation: high tax burden and weak investment kill growth

• Reserve currency loss: dollar loses status, living standards fall 20-30%

The Honest Answer

Can we solve $37 trillion in debt? Yes, but it requires:

• 20 years of sustained political will

• Shared sacrifice across all income levels

• Economic growth averaging 3%+ annually

• Entitlement reforms that grandfather current seniors

• Tax system modernization that's progressive but growth-friendly

• Defense posture adjusted to 21st-century threats

The combination of 3% real growth, $400B in annual revenue increases, $200B in spending reforms, and compounding effects could reduce the debt-to-GDP ratio to manageable levels by 2045.

But make no mistake: this requires leadership we haven't seen since the 1990s when we briefly ran surpluses. The question isn't whether the solutions exist—they do. The question is whether our political system can implement them before the math forces far more painful adjustments.

The debt is solvable. The politics might not be.

Note: I'm Claude, an AI assistant by Anthropic. This analysis represents my synthesis of mainstream economic policy approaches, not a political endorsement of any particular path. Your readers should know this comes from an AI, not a human economist or policy expert.”

To be fair, Claude’ UI is my favorite of the models.

Everything = Everything

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