Based on the data provided through the U.S. Department of the Treasury, is the public debt of the U.S. government increasing or decreasing? What impact will this trend have on the budget of the federal government and on the U.S. economy as a whole? PLEASE BE SPECIFIC Solution As per the data provided or accessed through the US Department of the Treasury, the public debt of US government is increasing. For instance, total public debt of US government in 2012 was $15.5 trillion which increased to $18.2 trillion in 2015 and is expected to increase to $20.6 trillion in 2019. Rising public debt of US government implies rising debt-servicing obligations of the US government. In other words, interest payment obligations of US government will rise. With US economy, still, not fully recovered from 2007-2009 recession and government spending already on a high, this increase in interest payments or debt servicing obligations will keep the budget of federal government in deficit in coming time period as well. This deficit will induce the US government to borrow more. This will displace the private borrowings and there by private investment. If government utilizes the additional borrowings for productive purposes then loss due to displacement of private investment can be minimized and US economy as a whole will grow. However, as stated above, rising public debt indicates that interest payment obligations will also rise. Interest payments are generally non-developmental in nature. So, good part of additional borrowings will go towards such endeavors and this coupled with displacement of private borrowings and investment will slow down the growth of US economy..

1. Based on the data provided through the U.S. Department of the Treasury, is the public debt of the
U.S. government increasing or decreasing? What impact will this trend have on the budget of the
federal government and on the U.S. economy as a whole? PLEASE BE SPECIFIC
Solution
As per the data provided or accessed through the US Department of the Treasury, the public debt
of US government is increasing.
For instance, total public debt of US government in 2012 was $15.5 trillion which increased to
$18.2 trillion in 2015 and is expected to increase to $20.6 trillion in 2019.
Rising public debt of US government implies rising debt-servicing obligations of the US
government.
In other words, interest payment obligations of US government will rise.
With US economy, still, not fully recovered from 2007-2009 recession and government spending
already on a high, this increase in interest payments or debt servicing obligations will keep the
budget of federal government in deficit in coming time period as well.
This deficit will induce the US government to borrow more. This will displace the private
borrowings and there by private investment. If government utilizes the additional borrowings for
productive purposes then loss due to displacement of private investment can be minimized and
US economy as a whole will grow.
However, as stated above, rising public debt indicates that interest payment obligations will also
rise. Interest payments are generally non-developmental in nature. So, good part of additional
borrowings will go towards such endeavors and this coupled with displacement of private
borrowings and investment will slow down the growth of US economy.