No, Trump, the U.S. Can’t Pay Down the National Debt with Oil

J oe Biden has overseen massive government spending and some of the largest annual deficits in U.S. history. Had Senators Joe Manchin and Kyrsten Sinema voted as Biden wanted on the Build Back Better Act, the spending would be trillions greater. To run against him, the Republican Party appears ready to renominate Donald Trump, who, as president, signed off on $8.4 trillion in new debt and apparently thinks he can pay it down with oil.

Trump said in his Iowa victory speech, “We’re going to drill. We’re going to use that money to lower your taxes even further. We gave you the biggest tax cut in history, and we’re going to lower them further. And we’re also going to pay off national debt.”

First of all, lowering taxes, even if desirable for other reasons, would contribute to increasing the debt if not offset with spending cuts. So Trump’s own promises are already working at cross purposes.

But the larger idea — that proceeds from energy production will pay off the national debt — is pure nonsense. Many of the things Trump says are difficult to take seriously, but given that he is increasingly likely to be the Republican nominee, and he has said this line repeatedly, it’s worth illustrating that this is simply a Trumpian version of the fiscal delusion that both parties are now committed to.

In a conversation with Sean Hannity on Fox News last June, Trump described oil as “liquid gold,” a phrase he has used elsewhere, and suggested that the value of oil in the ground is enough to do all sorts of things, including pay off the debt.

Let’s count the ways in which this makes no sense:

1. The national debt is $34 trillion. That’s about $8 trillion greater than the entire GDP of the United States. There’s no way it’s getting paid off.
2. Total U.S. proved reserves of crude oil were 41 billion barrels in 2021. The average price of a barrel of oil in 2023 was $78. Even if the U.S. somehow pumped all those reserves at once, sold all of them at double the average price of a barrel of oil in 2023, and gave all the money directly to the Treasury, it would only raise $6.4 trillion.
3. Let’s assume, for charity’s sake, that Trump meant the deficit, not the debt. The deficit last year was $2 trillion. The U.S. produced about 4.5 billion barrels of crude oil last year. At $78 per barrel, that comes out to total U.S. oil production valued at about $350 billion — not even close to covering the deficit.
4. Trump talked about how Saudi Arabia is wealthy because of oil. Total Saudi government revenue in 2023 was $318 billion. Over a third of that was from non-oil sources. And Saudi Arabia ran a budget deficit last year.
5. The revenues of the five largest U.S. oil companies (ExxonMobil, Chevron, Marathon, Valero, and Phillips 66) in 2023 totaled about $1 trillion. So even if there was a way for the federal government to confiscate all of that revenue, it still wouldn’t pay for half of the deficit last year.
6. The U.S. energy sector, unlike the energy sectors of Saudi Arabia and many other countries, is dominated by private companies. Their profits belong to them, not the government. They pay taxes on their profits like other companies, but Trump (correctly) cut corporate taxes while in office.
7. Using oil companies as cash cows is usually something Democrats want to do. Joe Biden’s most recent budget proposed several new taxes on fossil-fuel producers. Even so, those taxes were only projected to raise $97 billion over ten years.
8. U.S. oil production in 2023 was at an all-time high. Trump and the other Republican candidates blame Biden for reducing oil production, but that has not happened. (There are plenty of other, more legitimate criticisms of Biden’s energy policies.) Perhaps oil production would be even higher without Biden’s policies, and tangling up new projects in lengthy environmental reviews definitely doesn’t help. But oil is traded on a global market in which the U.S. is a major but by no means determinative player. Oil companies base production decisions primarily on global market conditions, not on who the president is.

This is all sort of a joke for Trump, but the fiscal mess the next president will face is not. The U.S. is headed towards a $5 trillion fiscal cliff at the end of 2025. Yet neither party is taking the problem seriously. Trump’s repeated promise to pay off the national debt with oil is only one example of this bipartisan trend.