Question

In your opinion, is the size of the national debt a problem? If so, describe the problem. If not, why not? Are the interest payments on the national debt a problem? If so, describe the problem. If not, why not?

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Answer 1

1. The national debt level of the United States is a measure of how much the U.S. government owes its creditors. Since the government almost always spends more than it takes in, the national debt continues to rise. It has increased more than 10 percent since President Trump took office in January of 2017 with the debt-to-GDP ratio approaching 110% in 2019.

The national debt is definitely a problem due to the following reasons:

a. The national debt is a bipartisan priority for Americans.

b. Interest costs are growing rapidly.

c. Higher interest costs could crowd out important public investments that can fuel economic growth — priority areas like education, R&D, and infrastructure. In addition, growing federal debt reduces the amount of private capital for investments, which hurts economic growth and wages.

d. Rising Debts- Stagnating wages and growing disparities in income and wealth are very concerning trends.

e. High amounts of debt leave policymakers with much less flexibility to deal with unexpected events. If there would be another major recession like that of 2007–2009 it will be more difficult to work the way out.

2. The interest on the national debt is how much the federal government must pay on outstanding public debt each year. The interest on the debt is $479 billion.

a. The interest on the debt immediately reduces the money available for other spending programs. As it increases over the next decade, advocates of those benefits will call for a reduction in spending in other areas.

b. In the long-term, a growing debt burden becomes a big problem for everyone. That's called the tipping point.

c. When the debt is greater than the entire country's production, lenders worry whether the country will repay them. Once lenders become concerned, they demand higher interest rates.

d. The rising interest on the debt worsens the U.S. debt crisis. Over the next 20 years, the Social Security Trust Fund won't have enough to cover the retirement benefits promised to seniors. Congress would find ways to reduce benefits rather than raise taxes.