The document summarizes information about the national debt of the United States from the organization Fix the Debt. It discusses that the national debt is over $18 trillion and growing due to spending exceeding revenue in recent decades. It also notes that the debt levels threaten economic growth and flexibility and will require action to reduce the debt through tax and spending reforms.
Niall Ferguson, noted economic historian, author, and Harvard Professor outlined the next steps in the current “Great Depression to a packed Canada 2020 Speakers Series crowd on Monday 23 February. For more, see www.canada2020.ca.
Presentation at Texas Christian University\'s AddRan Festival Of Undergraduate Scholarship and Creativity, April 2009 and winner of TCU\'s Economic Department Award to Best Presentation in Economics.
The next President will need to confront a number of budgetary challenges and will likely sign into law many federal tax and spending changes. Yet too often, election campaigns are about telling voters what they want to hear rather than what they need to know. To separate fiction from reality, the new Fiscal FactChecker series will monitor the 2016 Presidential campaign on an ongoing basis. To start with, we have identified 16 myths that may come up during the campaign.
Following Presentation deals with brief outline over what is known as "Global Recession". It has novice friendly language and attention seeking approach.
Niall Ferguson, noted economic historian, author, and Harvard Professor outlined the next steps in the current “Great Depression to a packed Canada 2020 Speakers Series crowd on Monday 23 February. For more, see www.canada2020.ca.
Presentation at Texas Christian University\'s AddRan Festival Of Undergraduate Scholarship and Creativity, April 2009 and winner of TCU\'s Economic Department Award to Best Presentation in Economics.
The next President will need to confront a number of budgetary challenges and will likely sign into law many federal tax and spending changes. Yet too often, election campaigns are about telling voters what they want to hear rather than what they need to know. To separate fiction from reality, the new Fiscal FactChecker series will monitor the 2016 Presidential campaign on an ongoing basis. To start with, we have identified 16 myths that may come up during the campaign.
Following Presentation deals with brief outline over what is known as "Global Recession". It has novice friendly language and attention seeking approach.
In a speech following the September 11, 2001, terrorist attacks and in the midst of the accompanying U.S. recession, Federal Reserve Chairman Alan Greenspan made a declaration that turned the world of the investment bankers upside down. Greenspan declared that the FOMC (Federal Open Markets Committee) stood prepared to maintain a highly accommodative policy stance for as long as needed to promote satisfactory economic performance. Translated from central banker speak, what Greenspan meant is that he is willing to inflate the money supply and hence lower interest rates for as long as necessary to “revive” the economy and repair it from the shock it received on that fateful day. What this meant for investors in the U.S. Treasury bond market is that they were not going to make any money on U.S. treasury securities for a very long time. Smart investors, diverted from the bond market, scanned Wall Street for a similar low-risk, high-return investment that could take the place of U.S. Treasury securities, and they fell in love with residential mortgages. On September 18, 2008, after months of economic anxiety and several massive bailouts of distressed firms by the government, the stock market had its largest single-day drop since September 11, 2001. Officials and commentators declared an economic emergency and moved on two fronts. The Department of the Treasury and Federal Reserve Board ("Fed") dusted off a 1932 statute and invoked the Fed's authority to stabilize failing firms by lending them money, although some were allowed to fail.
Presentation delivered by Chris Leung, Chief China Economist, Executive Director, DBS Bank at the marcus evans Private Wealth Management Summit APAC fall 2019 in Macao.
SunTrust Chief Economist Gregory Miller Briefs Chamber Members on Economic Trends
Gregory Miller, chief economist at SunTrust Bank, gave the keynote address at the 2015 Economic Outlook Briefing presented by Town of Chapel Hill Economic Development, describing trends and the latest economic issues facing the nation and the region.
As SunTrust’s chief economist, Gregory Miller analyzes the U.S. and global economies and forecasts the U.S. national economy. He advises corporate and bank boards of directors, as well as making frequent presentations to SunTrust business and wealth management clients. He sits on committees charged with interest rate setting, corporate investment, and benefits policy. He is a policy advisor for Private Wealth and Corporate Investment Banking groups.
Mr. Miller comments frequently in business media, including CNBC News, Bloomberg News, Fox Business, Reuters, USA Today, Wall Street Journal, Financial Times, Blue Chip Financial Forecast, and other local news media platforms.
In addition to Miller’s economic forecast, Chamber President & CEO Aaron Nelson presented the results of the Chamber’s annual Economic Conditions Survey, an online survey that gauges our community’s thoughts on the current economy based on Chamber member response.
For more information, visit carolinachamber.org or contact Kristen Smith at (919) 357-9988.
###
The Chapel Hill-Carrboro (NC) Chamber of Commerce is a business leadership organization serving the greater Chapel Hill, NC community. The Chamber serves and supports the business interests of its more than 1,200 members and helps create a sustainable community where they can thrive. Chamber members employ more than 80,000 in the Research Triangle region.
Will the US election trump the economy in 2017?RBS Economics
With the 2016 US Presidential election approach there have been questions about what this could mean for the US economy in 2017. In this blog, economist Rupert Seggins draws on the historical experience of the US and its G7 peers to offer an answer.
While this time may be different, history suggests that the bar for a President-caused US recession in 2017 is set much higher than may commonly be thought.
The national debt is more than an abstract concept for the government to worry about. It affects you and your family. This paper explains how and the need to fix the debt.
After the US dollar replaced gold, the US debt became the attention worldwide, thus the demand for the US dollar continued, furthermore the extremely low interest of the dollar. This helped the US government to borrow great amounts of debt as well as kept the creditors pleased. Due to the pandemic, the US economy retrograded because of the tax cut and unproductive rescue spending plan plus surpassing spending of the government. The rising inflation starts to increase to high levels, which certainly the government must cut back spending or its patterns, while this will lead to uncertain consequences for the long future. This paper discusses several different perspectives on the US government's sustainability as its ability to settle the debt in future, the fate of growth burdened with that debt through the neoclassical mode of growth, and also the effect of anxiety of defaults and unfunded obligations. Inversely, it explores the strength of the dollar with a low-interest rate and its sustainability worldwide. We also propose ways helping of strengthen the fiscal government position and solutions to help the economy recover in long term and to easiest the situation. In the synopsis, we propose something that could affect and shake the global market.
In a speech following the September 11, 2001, terrorist attacks and in the midst of the accompanying U.S. recession, Federal Reserve Chairman Alan Greenspan made a declaration that turned the world of the investment bankers upside down. Greenspan declared that the FOMC (Federal Open Markets Committee) stood prepared to maintain a highly accommodative policy stance for as long as needed to promote satisfactory economic performance. Translated from central banker speak, what Greenspan meant is that he is willing to inflate the money supply and hence lower interest rates for as long as necessary to “revive” the economy and repair it from the shock it received on that fateful day. What this meant for investors in the U.S. Treasury bond market is that they were not going to make any money on U.S. treasury securities for a very long time. Smart investors, diverted from the bond market, scanned Wall Street for a similar low-risk, high-return investment that could take the place of U.S. Treasury securities, and they fell in love with residential mortgages. On September 18, 2008, after months of economic anxiety and several massive bailouts of distressed firms by the government, the stock market had its largest single-day drop since September 11, 2001. Officials and commentators declared an economic emergency and moved on two fronts. The Department of the Treasury and Federal Reserve Board ("Fed") dusted off a 1932 statute and invoked the Fed's authority to stabilize failing firms by lending them money, although some were allowed to fail.
Presentation delivered by Chris Leung, Chief China Economist, Executive Director, DBS Bank at the marcus evans Private Wealth Management Summit APAC fall 2019 in Macao.
SunTrust Chief Economist Gregory Miller Briefs Chamber Members on Economic Trends
Gregory Miller, chief economist at SunTrust Bank, gave the keynote address at the 2015 Economic Outlook Briefing presented by Town of Chapel Hill Economic Development, describing trends and the latest economic issues facing the nation and the region.
As SunTrust’s chief economist, Gregory Miller analyzes the U.S. and global economies and forecasts the U.S. national economy. He advises corporate and bank boards of directors, as well as making frequent presentations to SunTrust business and wealth management clients. He sits on committees charged with interest rate setting, corporate investment, and benefits policy. He is a policy advisor for Private Wealth and Corporate Investment Banking groups.
Mr. Miller comments frequently in business media, including CNBC News, Bloomberg News, Fox Business, Reuters, USA Today, Wall Street Journal, Financial Times, Blue Chip Financial Forecast, and other local news media platforms.
In addition to Miller’s economic forecast, Chamber President & CEO Aaron Nelson presented the results of the Chamber’s annual Economic Conditions Survey, an online survey that gauges our community’s thoughts on the current economy based on Chamber member response.
For more information, visit carolinachamber.org or contact Kristen Smith at (919) 357-9988.
###
The Chapel Hill-Carrboro (NC) Chamber of Commerce is a business leadership organization serving the greater Chapel Hill, NC community. The Chamber serves and supports the business interests of its more than 1,200 members and helps create a sustainable community where they can thrive. Chamber members employ more than 80,000 in the Research Triangle region.
Will the US election trump the economy in 2017?RBS Economics
With the 2016 US Presidential election approach there have been questions about what this could mean for the US economy in 2017. In this blog, economist Rupert Seggins draws on the historical experience of the US and its G7 peers to offer an answer.
While this time may be different, history suggests that the bar for a President-caused US recession in 2017 is set much higher than may commonly be thought.
The national debt is more than an abstract concept for the government to worry about. It affects you and your family. This paper explains how and the need to fix the debt.
After the US dollar replaced gold, the US debt became the attention worldwide, thus the demand for the US dollar continued, furthermore the extremely low interest of the dollar. This helped the US government to borrow great amounts of debt as well as kept the creditors pleased. Due to the pandemic, the US economy retrograded because of the tax cut and unproductive rescue spending plan plus surpassing spending of the government. The rising inflation starts to increase to high levels, which certainly the government must cut back spending or its patterns, while this will lead to uncertain consequences for the long future. This paper discusses several different perspectives on the US government's sustainability as its ability to settle the debt in future, the fate of growth burdened with that debt through the neoclassical mode of growth, and also the effect of anxiety of defaults and unfunded obligations. Inversely, it explores the strength of the dollar with a low-interest rate and its sustainability worldwide. We also propose ways helping of strengthen the fiscal government position and solutions to help the economy recover in long term and to easiest the situation. In the synopsis, we propose something that could affect and shake the global market.
The presidential campaign can be an excellent opportunity to engage in a frank, constructive dialogue about the nation's fiscal challenges and what to do about them. Of course, it is much easier to rely on well-worn myths than to explain complex concepts and propose ideas that voters may not like. That’s why we published "16 Budget Myths to Watch Out for in the 2016 Campaign."
We debunk several common myths about the national debt. Like deficits are falling; there is no harm in waiting; deficit reduction will harm the most vulnerable; and the debt can be fixed by cutting waste, fraud or foreign aid.
Interest payments on the national debt will be the fastest growing part of the federal budget. Learn more about the relationship between interest rates and debt.
The State of the Union cannot be strong without a strong fiscal foundation to the economy. The era of declining deficits is coming to an end and the era of record-level debt is projected to continue indefinitely. Policymakers cannot afford to ignore the debt problem and must find ways to finance the future in a sustainable manner.
Investors are generally happy that the worst fears of runaway inflation versus a severe recession were not realized in 2023. Nevertheless, there are still economic and investment risks for 2024 to be considered.
https://youtu.be/wBzD8WW16P8
Reduced Government Spending and Your InvestmentsInvestingTips
Interest on the national debt threatens to become a larger cost than other major parts of the budget. To the degree that belt tightening is chosen as a way to solve this problem, we need to look at reduced government spending and your investments.
https://youtu.be/1mLIFxWyATE
A strong state of the union will require a strong approach to addressing high and rising national debt. Instead of ignoring the problem, our leaders must confront the situation and find ways to finance the future responsibly. Here’s a look at the State of the Debt.
In this issue:
1. TD Wealth Asset Allocation Committee: Market outlook: the year ahead
2. TD Economics: A foundation for uncertain times
3. TD Wealth: New principal residence exemption rules
Although there has been much discussion about health care recently, very little attention has been paid to Medicare. While some politicians promise not to touch the vital program, such pledges will only hurt it as it faces serious financing issues that must be addressed and will make the larger health care problem harder to solve. See more at http://www.fixthedebt.org/why-leaving-medicare-alone-will-only-weaken-it
Washington is far from a consensus on what to do about health care. But the future health of the federal budget depends on bringing down health care costs. Here is why we cannot fix the debt if we do not address health care spending.
The latest official budget and economic forecast for the next decade from the nonpartisan Congressional Budget Office (CBO), shows national debt rising well past historical norms and warns of serious consequences. Here are the key figures and what they mean.
The national debt is forecast to grow unsustainably in the years to come if we don’t take action. Though the numbers are staggering, let’s look beyond them and focus on what they could mean for a typical American. Let’s name her Hope. http://www.fixthedebt.org/growing-up-with-debt
If Congress and the President cannot agree on at least short-term legislation funding federal operations, a government shutdown will result. This primer provides basic information to better understand what could happen.
With interest rates rising, the debt ceiling looming once again, and high-profile issues like tax reform on the agenda, politicians in Washington are finding it harder to ignore the high and rising national debt. However, instead of addressing the issue openly and honestly, too many are resorting to myths to muddy the waters. We confront some of the most common myths with the facts.
Once again, the federal government is running up against the statutory debt limit, which has major implications for the national debt and the U.S. economy. Here’s a basic overview of this critical issue.
Passing a budget is just one step in financing the federal government. Specific decisions about government spending are made through an annual process called appropriations. Here are answers to key questions to better understand the process.
The mounting national debt is getting harder for Congress to ignore and lawmakers are turning to us for advice. Committee for a Responsible Federal Budget (CRFB) co-chair Mitch Daniels, Campaign to Fix the Debt co-chair Judd Gregg, and Fix the Debt steering committee and CRFB board member Alice Rivlin testified before the Joint Economic Committee of Congress on the national debt on September 8.
Slides from the June 21, 2016 Fix the Debt webinar with former U.S. Comptroller General David Walker on how federal government finances affect state budgets. Watch the video at http://www.fixthedebt.org/chat-with-david-walker.
Where do your tax dollars go? Who pays federal taxes? What are tax expenditures? We explain the U.S. federal tax system in a few easy-to-understand charts. See more resources at http://www.fixthedebt.org/tax-reform-resource-page
Where does your tax dollars go? Who pays federal taxes? What are tax expenditures? We explain the U.S. federal tax system in a few easy-to-understand charts. See more resources at http://www.fixthedebt.org/tax-reform-resource-page
President Franklin Delano Roosevelt signed the Social Security Act into law on August 14, 1935. As the critical program celebrates its 80th birthday, we take a look at the challenges that must be overcome so that it can see at least 80 more years.
President Franklin Delano Roosevelt signed the Social Security Act into law on August 14, 1935. As the critical program celebrates its 80th birthday, we take a look at the challenges that must be overcome so that it can see at least 80 more years.
Despite the recent improvement in the federal budget deficit, the national debt is still on an unsustainable course. This infographic illustrates why this is a problem.
A process server is a authorized person for delivering legal documents, such as summons, complaints, subpoenas, and other court papers, to peoples involved in legal proceedings.
Presentation by Jared Jageler, David Adler, Noelia Duchovny, and Evan Herrnstadt, analysts in CBO’s Microeconomic Studies and Health Analysis Divisions, at the Association of Environmental and Resource Economists Summer Conference.
Understanding the Challenges of Street ChildrenSERUDS INDIA
By raising awareness, providing support, advocating for change, and offering assistance to children in need, individuals can play a crucial role in improving the lives of street children and helping them realize their full potential
Donate Us
https://serudsindia.org/how-individuals-can-support-street-children-in-india/
#donatefororphan, #donateforhomelesschildren, #childeducation, #ngochildeducation, #donateforeducation, #donationforchildeducation, #sponsorforpoorchild, #sponsororphanage #sponsororphanchild, #donation, #education, #charity, #educationforchild, #seruds, #kurnool, #joyhome
Russian anarchist and anti-war movement in the third year of full-scale warAntti Rautiainen
Anarchist group ANA Regensburg hosted my online-presentation on 16th of May 2024, in which I discussed tactics of anti-war activism in Russia, and reasons why the anti-war movement has not been able to make an impact to change the course of events yet. Cases of anarchists repressed for anti-war activities are presented, as well as strategies of support for political prisoners, and modest successes in supporting their struggles.
Thumbnail picture is by MediaZona, you may read their report on anti-war arson attacks in Russia here: https://en.zona.media/article/2022/10/13/burn-map
Links:
Autonomous Action
http://Avtonom.org
Anarchist Black Cross Moscow
http://Avtonom.org/abc
Solidarity Zone
https://t.me/solidarity_zone
Memorial
https://memopzk.org/, https://t.me/pzk_memorial
OVD-Info
https://en.ovdinfo.org/antiwar-ovd-info-guide
RosUznik
https://rosuznik.org/
Uznik Online
http://uznikonline.tilda.ws/
Russian Reader
https://therussianreader.com/
ABC Irkutsk
https://abc38.noblogs.org/
Send mail to prisoners from abroad:
http://Prisonmail.online
YouTube: https://youtu.be/c5nSOdU48O8
Spotify: https://podcasters.spotify.com/pod/show/libertarianlifecoach/episodes/Russian-anarchist-and-anti-war-movement-in-the-third-year-of-full-scale-war-e2k8ai4
ZGB - The Role of Generative AI in Government transformation.pdfSaeed Al Dhaheri
This keynote was presented during the the 7th edition of the UAE Hackathon 2024. It highlights the role of AI and Generative AI in addressing government transformation to achieve zero government bureaucracy
PNRR MADRID GREENTECH FOR BROWN NETWORKS NETWORKS MUR_MUSA_TEBALDI.pdf
Q&A: Everything You Need to know About the National Debt
1. CHAIRMEN
MICHAEL BLOOMBERG
JUDD GREGG
EDWARD RENDELL
FOUNDERS
ERSKINE BOWLES
AL SIMPSON
STEERING COMMITTEE
PHIL BREDESEN
KENT CONRAD
DAVID COTE
PETE DOMENICI
VIC FAZIO
JAMES B. LEE, JR.
JIM MCCRERY
SAM NUNN
JIM NUSSLE
MICHAEL PETERSON
STEVEN RATTNER
ALICE RIVLIN
SCOTT SMITH
ANTONIO VILLARAIGOSA
ROBERT ZOELLICK
1899 L Street, NW · Suite 225 · Washington, DC 20036 · (202) 596-3597 · www.fixthedebt.org
Q&A: Everything You Need to Know About the National Debt
How big is the debt?
Currently, the national debt held by the public is about $13 trillion, which is
around 74 percent of the country’s economy, as measured by Gross Domestic
Product (GDP). The gross debt, which includes money owed to other parts of
the federal government, is about $18 trillion, or roughly 102 percent of GDP.
Throughout history, the United States has normally maintained some amount
of debt. However, with the exception of a brief period during and immediately
after World War II, debt levels have never been as high as they are now.
Without congressional action, debt levels will continue increasing.
Why do we have a national debt?
Particularly over the last 40 years, the federal government has generally spent
more than it collected in revenue. When this occurs, the government must
borrow money to cover the difference. The government borrows by selling
securities such as Treasury bonds, then agreeing to pay bondholders back with
interest. Over time, this borrowing accumulates into the national debt.
Source: CBO 2014 Long-term Budget Outlook
0%
20%
40%
60%
80%
100%
120%
140%
1790 1810 1830 1850 1870 1890 1910 1930 1950 1970 1990 2010 2030 2050
Historical U.S. Debt
Civil War World War I
World War II
Actual ProjectedPercent of the Economy
2. 1899 L Street, NW · Suite 225 · Washington, DC 20036 · (202) 596-3597 · www.fixthedebt.org
Page 2
What are the effects of a high national debt?
The effects of the national debt on the economy are far from abstract. High levels of federal debt
will cause:
Higher costs of living: Large amounts of debt mean higher interest rates on everything
from credit cards to mortgage loans.
Slower wage growth: In normal economic times, every dollar an investor spends buying
government debt is a dollar not invested elsewhere in the economy. That is, high debt
“crowds out” more productive investments, leading to slower economic growth and
lower wages.
Generational inequality: By not making responsible debt choices, we are placing higher
debt burdens on our children and threatening their standard of living and retirement.
Reduced fiscal flexibility: Our debt levels doubled between 2008 and 2013 from 35
percent of GDP to over 70 percent, a result of and in response to the Great Recession. We
can’t afford another recession. With an already high debt, the government has less room
to respond to future crises such as international events or economic downturns.
Fiscal crises: Unchecked debt growth could eventually lead to a fiscal crisis, as recently
occurred across Europe. At that point, investors in U.S. debt will demand higher returns,
driving up interest payments, and leading to a debt situation spiraling out of control.
How can we bring our debt levels down?
Achieving meaningful debt reduction will require a comprehensive plan that addresses the major
drivers of our debt. Reforming the tax code, slowing the growth of entitlement spending, and
reducing other spending, and helping to grow the economy are all necessary to put debt on a
downward path over the long term.
Why act sooner rather than later?
Acting now to address our growing debt has numerous advantages. The sooner we act, the easier
it will be to make changes. If we act now, changes can be phased in gradually so they are less
disruptive. Because of compound interest, acting sooner means we can reduce debt to a
sustainable level with a smaller amount of savings. For example, if we start now, we would need
spending cuts and/or tax increases equaling 2.6 percent of the economy to bring the debt
gradually down to historical levels in the next 25 years. Waiting 5 years, however, would require
adjustments of 3.2 percent of GDP and waiting 10 years would require 4.3 percent. Waiting has
real costs.
3. 1899 L Street, NW · Suite 225 · Washington, DC 20036 · (202) 596-3597 · www.fixthedebt.org
Page 3
The sooner we act, the sooner we will receive the dividends of debt reduction such as faster
economic growth, faster wage growth, and increased fiscal flexibility to address priorities. A
smart mix of deficit reduction can also lower income inequality.
How much do we pay in interest?
Interest on the debt is now and is projected to continue being the fastest growing area of federal
spending in the coming years, outpacing even Medicare or Social Security. In 2014, the U.S. spent
$228 billion, or 7 percent of the federal budget, paying for interest on the debt.
In recent years, interest rates have been at historic lows. As they return closer to normal levels,
the amount the government spends on interest will rise substantially. The Congressional Budget
Office projects the interest rate on ten-year Treasury bonds will climb from slightly over 2 percent
today to nearly 5 percent by 2019. As a result, interest payments will double to almost $500
billion. By 2030, interest will represent about 17 percent of the federal budget and continue to
climb. This represents money that cannot be spent on other government priorities such as
education, national defense, research or infrastructure.
If interest rates rise even higher, our payments will be even greater—a one percentage point
increase costs the country an additional staggering $1.2 trillion over a decade. If interest rates
returned to the record-high levels of the 1980s, the country would pay $6.2 trillion more in
interest.
$228
Veterans'
Benefits
$86
Food Stamps
$78
Unemployment
Benefits
$45
Pell Grants $13
$223
$0
$50
$100
$150
$200
$250
Billions
Interest and Certain Government Programs in
2014
Net Interest
4. 1899 L Street, NW · Suite 225 · Washington, DC 20036 · (202) 596-3597 · www.fixthedebt.org
Page 4
To whom do we owe the national debt?
While a majority of U.S. debt is held domestically, a sizable and growing portion is held by foreign
investors. Both foreign governments and foreign citizens purchase U.S. debt.
Who Owns the Debt?
Debt Held by the Public, September 2013
Source: U.S. Treasury Department. Countries include purchases by that government
and by investors with accounts in that country.
There are several reasons why U.S. debt is attractive to foreign investors. In times of economic
turmoil, such as during the recent financial crisis and its aftermath, U.S. Treasury bonds are
considered a safe investment. Foreign investors also hold U.S. Treasuries because they are highly
liquid (easily converted to cash) and because they provide protection against fluctuating
exchange rates.
China and Japan are the largest foreign owners of U.S. debt. In addition to the reasons already
mentioned, these countries can also influence their currency exchange rates through large
purchases of U.S. debt. Altogether, at the beginning of 2014, about $5.8 trillion of U.S. debt was
held by foreign investors.
Federal
Reserve
19%
Mutual
funds
9%
Pension
funds
6%
Other U.S.
Investors
20%
China
10%
Japan
10%
Other
Countries
26%
Foreign
46%
United States
54%
5. 1899 L Street, NW · Suite 225 · Washington, DC 20036 · (202) 596-3597 · www.fixthedebt.org
Page 5
What has led to our current debt levels?
The U.S. had budget surpluses from 1997-2000. Since then, tax cuts, spending on the wars in Iraq
and Afghanistan, and overall increases in spending all added significantly to the national debt.
The economic crisis and the response also substantially contributed. Falling income levels and
rising unemployment meant lower revenue, while spending also automatically grew on social
safety net programs—such as unemployment benefits and food stamps.
What is driving our future debt path?
Many of the drivers of our past debt are nearing resolution—the wars are winding down and the
economy is recovering. Unfortunately, our future debt will grow if nothing is done, due to a
different set of factors. These include:
• Population Aging: As the population grows older, spending on Social Security and
Medicare will increase dramatically. Additionally, these older Americans will no longer be
working and will pay fewer taxes, leading to lower revenues.
• Rapid Health Care Cost Growth: Federal health spending is currently equal to 4.9 percent
of the economy. In 25 years, it is projected to rise to approximately 8 percent.
• Growing Interest Costs: As interest rates return to normal levels, the cost of interest
payments on debt already borrowed will increase.
• Insufficient Revenue: The historical amount of revenue collected is not sufficient to
afford record-high levels of retirees, health care spending, and interest. Our debt
problems are so large they cannot be solved by either spending cuts or revenue increases
alone.
What is the appropriate level of debt?
The historical average of our debt as a share of the economy is around 40 percent, slightly over
half of current levels. It is not necessary to pay off the national debt entirely to restore our
nation’s fiscal health. In fact, incurring some national debt can be useful in responding quickly to
unexpected events such as wars and recessions. However, current debt levels limit this flexibility.
Our debt/GDP ratio should be placed on a clear downward path toward the historical average.
The Peterson Pew Commission on Budget Reform recommended a medium-term goal of a 60%
debt-to-GDP ratio.
6. 1899 L Street, NW · Suite 225 · Washington, DC 20036 · (202) 596-3597 · www.fixthedebt.org
Page 6
Do we have to balance the budget each year?
While narrowing the gap between spending and revenue is important, it is not necessary to
balance the budget each year to bring the debt under control. Because debt/GDP is the best
measure of an economy’s capacity to handle debt, as long as the economy is growing faster than
debt, debt will fall relative to GDP.
Small deficits are acceptable. During a recession, larger deficits are often needed to allow the
government to reduce the economic impacts of the downturn. However, to foster flexibility
during recessions, deficits must fall back to low levels in periods of economic growth.
What is the difference between deficits and debt?
Deficits occur each year that federal spending exceeds revenues collected. Alternatively, when
revenues exceed spending, the federal budget runs a surplus. When the federal government runs
deficits for multiple years—as we have done with only a few exceptions in the last 40 years—the
deficits plus the interest incurred on that borrowing accumulate into the national debt.