Mind The Gap
The Fiscal Gap
The above are the facts and conclusion outlined in the US Treasury Department’s own 2025 consolidate financial statements. With the war in Iran and the mindboggling numbers in the report, the release did not get much media attention. But it is getting the attention of some:
“This is an unsustainable fiscal trajectory. Whether we now rise to that challenge is, in no small part, a test of our national character.” - Current Treasury Secretary Scott Bessent
“America is now $39,000,000,000,000 in debt… It took roughly 200 years to accumulate the first $1 trillion. Now we add that in a matter of months. Every child in America today carries a $530,000 share of this debt—a crushing legacy we must reverse. To add insult to injury, we spend more than $1 trillion a year just on interest to service our debt, more than the entire defense budget. The national debt continues to pose an existential threat to the future of our nation.” - House Budget Chairman Jodey Arrington (R, Texas)
That is A LOT of zeroes so let’s get rid of seven of them and compare it to some dental practices.
US as a Failing Practice
So now that you understand that the US government is like a very poorly run dental practice that just keeps on taking debt to pay the operating costs and the interest on the debt it already has, what can you do?
The Sustainability Challenge: With current debt now equal to total US Gross Domestic Product, the current trajectory can not continue. If the government was a dental practice, the bank would have stopped lending a long time ago and forced the practice into bankruptcy. Just like a poorly run practice, there are two options to fix this problem: 1) raise revenue with taxes and 2) cut spending. For a high-earning dentist (anything over $400k), you should be prepared for dramatic increases in tax rates and make plans to pay tax now with suspended cost recognition and ROTH conversions.
The Reduced Benefits Expectation: This $39 trillion mentioned in this report does NOT include Medicare and Social Security promises, which are expected to be $88.4 trillion over the next 75 years. The funding shortage has been ignored by Congress for 40 years but at some point, benefits will likely need to be reduced. With the ability to save for your own retirement with 401(k), Profit Share and Cash Balance plans, you should exclude any Social Security Benefits when considering your retirement funding.
The State-Level Impacts: While the Federal government is not required to have a balanced budget, state governments are not allowed to spend more than they bring in. Therefore, as Federal support of state programs continue to decrease, you can expect more states to put in a “Millionaire Tax” like Massachusetts and Washington. If you are starting a practice or considering retirement, pay close attention to all the state and local taxes for each location on your list.