While the ever increasing national debt gains a lot of attention in the media, it may not be as well understood by the American public. This year, the Pew Research Center surveyed that approximately 57% of the American public were concerned about the budget deficit (Desilver, 2023). While the current outstanding debt is over $33 trillion, almost $7 trillion is what the government "owes itself."
The Committee for Economic Develop of the Conference Board says that the size of the U.S. economy should be operating at a debt:GDP ratio of 70%. At the moment, the debt held by the public is approximately 98% of the country's GDP. The Penn Wharton University of Pennsylvania Budget Model estimates that a debt:GDP ratio of 200% without the government defaulting on its debt (PWBM, 2023). While that may appear like some breathing room, the current situation may seem a bit more dire to the current economic situation of the American people. In response to the Pandemic, government debt exploded by more than 89% (Morabito, 2023). The government demonstrating an expansionary fiscal policy in response to high unemployment and an economy functioning below optimal levels secondary to the pandemic. Now however, this goes directly against what
the Federal Reserve is trying to accomplish by cooling down the economy and shrink money supply to cool consumer demand. The question of should the American people worry? Continued spending and increase in debt may provide fewer business investment opportunities, less flexibility to respond to a potential future crisis, and erosion of several established safety nets such as those on Medicaid and Social Security (PGPF, 2023). It
appears that it's not a question of should
Americans worry, but how many
already are. Surveys show that approximately 50% of respondents believe they are worse off now than in 2021 with 61% of those earning below $40,000 (Martin, 2023). At this point it is not should Americans start to worry, but when. The data seems to suggest that it will be sooner rather than later. References
DeSilver, D. (2023, February 14). 5 facts about the U.S. national debt
. Pew
Research Center. https://www.pewresearch.org/short-reads/2023/02/14/facts-about-the-us-
national-debt/Links to an external site.
Martin, C. (2023, February 23). Cantor: National debt and inflation: Tough road ahead
Morabito, C. (2023, September 10). U.S. debt is nearly $33 trillion. But some economists say not all debt is bad.
CNBC. https://www.cnbc.com/2023/09/10/why-the-national-debt-can-both-help-
and-hurt-the-us-economy.html
PWBM. (2023, October 6). When Does Federal Debt Reach Unsustainable Levels?
Penn Wharton Budget Model. https://budgetmodel.wharton.upenn.edu/issues/2023/10/6/when-does-
federal-debt-reach-unsustainable-levels
Top 10 Reasons Why the National Debt Matters
. (2023, September 18). Www.pgpf.org. https://www.pgpf.org/top-10-reasons-why-the-national-
debt-matters#:~:text=A%20nation%20saddled%20with%20debt
