Debt

I have heard the cry of wolf concerning the national debt for most of my life. I was not overly concerned since the debt remained at 50% of GDP for most of the years since WW 2. However, when Obama took office, it rose above 50% and has continued rising to this day. By the end of Obama’s term, it stood at 98%. During the Trump years the debt went from $20.2 trillion to $29.6 trillion and during the Biden term it increased to $36.1 trillion which is 122% of GDP. Experts say that the two ways to reduce the debt is by raising taxes or cutting spending but this has not worked in the past because when revenues increase the extra money is not applied to the debt but is used for new programs designed to buy votes. Cutting spending is not easy as everyone is now witnessing so what is the long-term answer. The US can lower the debt if the increase in growth (GDP) and interest rates are in balance. The growth will come with reshoring but at the start interest rates will be too high. In time if growth is sustained the interest rates will fall and the debt to GDP ratio will decline. This balance will not be achieved during the Trump years but by the next administration.