Question

In: Economics

Who is in charge of the USA national debt?

Who is in charge of the USA national debt?

Solutions

Expert Solution

As an overview, the United States has total federal debt of $21.5 trillion as of third quarter of 2018. The debt in United States is 104% of GDP for the same period.

It is the United States government that is in charge of the USA national debt. This debt has been accumulated over decades through sustained budget deficits (excess of government expenditure over revenue). Therefore, debt servicing, debt repayment, issue of additional debt to meet deficits and setting a debt ceiling is the responsibility of the US government.

It is however worth noting that the burden of the debt is ultimately likely to fall on the taxpayers. As federal debt balloons, it is entirely likely that the United States government increase tax (individual or corporate) in the future to control deficit and reduce debt.

In conclusion, it is the USA government that is in charge of the debt, but the taxpayers will bear the debt burden in the long-term.

Note: Additional debt is issued by the government to cover deficits and this debt can be bought by foreign government and investors, state & local government, banks and mutual funds.


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