National Debt

HOW SHOULD THE U.S. PAY OFF ITS NATIONAL DEBT?

I. ABSTRACT

The United States currently carries xxx worth of debt on its national balance sheet. While on its face this figure appears insurmountable, there are several policies, propositions, and theories premised on reducing the United States’ national debt. Consequently, this paper will discuss the multiple issues surrounding the national debt, while setting forth the argument for increasing Gross Domestic Product as the most efficient way to solve this most volatile topic.

II. INTRODUCTION

“We don’t have a revenue problem. We have a spending problem.”

- Congressman Peter Welch (D – VT)

In fiscal year 2014, the federal government spent more tax dollars than it received, resulting in a budget deficit of $483.35 billion. This has been true for much of recent history. While operating in a budget deficit, the government has typically turned to individuals, businesses, and foreign governments in an attempt to reduce the aforementioned gap by selling Treasury Bonds. However, while selling T-bills seems harmless, the federal government is incurring additional liabilities – akin to paying your mortgage with a credit card. The accumulation of this borrowing is considered our “national debt”, the amount of which has been a volatile mainstream topic since our nation’s birth.

At present, the U.S. national debt amounts to approximately $18.2 trillion. At only 103.5 percent of GDP, this would be the equivalent of $60,000 dollars for every US citizen, $147,304 for every household in the U.S., 103% of the U.S. gross domestic product, and 540% of annual federal revenues.

Some see pros and cons to this accumulation of debt. From a negative perspective increased debt can mean:

• higher interest rates on loans and credit cards attributing to a higher cost of living.

• Dollars spent buying government debt can not be invested in other parts of our economy causing slower economic...