What Should We Do About National Debt, And When?

[Somerled]

WASHINGTON ? The national debt is rising to levels that have never been seen in the United States during peacetime. Everyone agrees that it must come down. The question is how fast. Too fast could weaken the already weak economy. Too slow could do the same thing.Two prominent economists who published an acclaimed study last year of 800 years of national financial crises, "This Time Is Different," see flaws on both sides of today's argument. The debt must be dealt with, they say, but not too fast.Their book concludes that when any nation's ratio of government debt to gross domestic product exceeds 90 percent, negative economic consequences historically follow. Today's U.S. debt-to-GDP level is 89 percent.The U.S. must reduce its debt or suffer economic stagnation, they said in interviews with McClatchy , but in the short term they also favor more government stimulus to boost the economy, even if that raises the debt a bit more.

[smid]

Get as many people working and paying taxes as we had in 1999 and get rid of the tax cuts and we will pay down the debit. Get Congress back to the budget rules of 1998 or so. That is how to do it.

[Barthel]

Cancel all government programs and payouts and spend the money paying off this debt. $500,000,000/day to Communist China? That should be stopped immediately. THAT is our foreign threat.   danielpauldavis 41 months ago Please sign in to give a compliment. Please verify your account to give a compliment. Please sign in to send a message. Please verify your account to send a message.

[shipley]

NormanL said: 2 The CBO, the budget analysis arm of Congress , effectively acknowledged both arguments in an issue brief July 27 . "Although deficits during or shortly after a recession generally hasten economic recovery, persistent deficits and continually mounting debt would have several negative economic consequences for the United States ," it said. Once a nation's debt-to-GDP ratio passes 90 percent, the scholars said, investors worry about the government's ability to repay. They demand higher rates of return for buying new debt. The cost of servicing debt soars, and investment and consumption are dampened, leading to stagnation. 41 months ago

[Chonen]

PamPerdue said: 4 "The debt" and "The economic crisis" are largely unrelated matters. The classic response to an economic crisis is to go into debt. That's something you do yourself: if your car fails and you need a new one, you borrow money and buy it. Nobody treats it as a moral failure.The failure comes from the fact that we've accumulated debt for 30 years without trying significantly to pay it down. That's a separate problem, one that should for the moment be deferred(again!) to deal with the immediate one.The debt would impinge on our ability to deal with this crisis if we weren't able to borrow money, but paradoxically, everybody is happy to loan us money. Government bond rates are fairly low. People see it as a safe place to put their money at a time when the stock market is flaky.That doesn't mean we don't need to respond better to the debt than we have in the past, and that means getting plans in place now. As with all debt, the only solution is to spend less and earn more. Neither of those things are popular, which is why past Congresses and Presidents have been reluctant to do them. They got away with it, but sooner or later they won't be so lucky. 41 months ago

[Hieremias]

$500,000,000/day to Communist China? That should be stopped immediately. THAT is our foreign threat.  

[jarel]

Gary4books said: 3 Get as many people working and paying taxes as we had in 1999 and get rid of the tax cuts and we will pay down the debit. Get Congress back to the budget rules of 1998 or so. That is how to do it. 41 months ago

[Gilli]

I know it's been done before, but I like the idea of placing a reasonable tax on gasoline that would go directly to paying down the national debt.

[Deasach]

rhine44 said: 1 I know it's been done before, but I like the idea of placing a reasonable tax on gasoline that would go directly to paying down the national debt. 41 months ago

[Mogue]

"The debt" and "The economic crisis" are largely unrelated matters. The classic response to an economic crisis is to go into debt. That's something you do yourself: if your car fails and you need a new one, you borrow money and buy it. Nobody treats it as a moral failure.The failure comes from the fact that we've accumulated debt for 30 years without trying significantly to pay it down. That's a separate problem, one that should for the moment be deferred(again!) to deal with the immediate one.The debt would impinge on our ability to deal with this crisis if we weren't able to borrow money, but paradoxically, everybody is happy to loan us money. Government bond rates are fairly low. People see it as a safe place to put their money at a time when the stock market is flaky.That doesn't mean we don't need to respond better to the debt than we have in the past, and that means getting plans in place now. As with all debt, the only solution is to spend less and earn more. Neither of those things are popular, which is why past Congresses and Presidents have been reluctant to do them. They got away with it, but sooner or later they won't be so lucky.