Are You Worried About Our National Debt?

Though the national debt is at a post-war high, the willingness of policymakers to address it seems as if it is at an all-time low. The last two years have been defined by massive, unpaid-for tax cuts and spending increases, with little attention to addressing near- or long-term fiscal imbalances.

Meanwhile, commenters on the left and right are increasingly urging Washington to ignore mounting debt levels and instead focus on enacting new costly initiatives while protecting special interest tax breaks and spending programs.

This new debt denialism could not come at a worse time. The rapid aging of the population means that deficits and debt are on course to explode in the coming decades. With a strong economy and unemployment rate below 4 percent, now is the time to begin reducing deficits, not increasing them. As President John F. Kennedy once said, “the time to repair the roof is when the sun is shining.”

Yet instead of repairing our fiscal situation, policymakers seem intent on worsening it. Never have deficits been this high when the economy was this strong – and they are growing. We project debt held by the public as a share of the economy will double by mid-century under current law, from 78 percent of Gross Domestic Product (GDP) today to over 150 percent by 2030. Extending current policy, we project debt will rise above 205 percent of GDP by 2050 – nearly twice its historic record.

The consequences of such high and rising debt could be significant and will result in the following:

• Slow income growth;
• Increase interest payments, crowding out other priorities;
• Push up interest rates;
• Dampen our ability to respond to the next recession or emergency;
• Place more burden on future generations; and
• Increase the risk of a fiscal crisis.     TO READ ENTIRE ARTICLE, CLICK HERE...