The Pros And Cons Of Government Debt

181 Words1 Pages
It is well known that when government debt as a percentage of GDP exceeds a critical point, it becomes disastrous (Checherita and Rother, 2010). The national debt has reached a nearly unbelievable level, leaving policymakers, government officials, and the general public worried. The United States has only ran a surplus 4 years- 1998 to 2001- which has allowed for quite the compounding of debt. The likelihood of the government defaulting on its debt service obligation increases as the national debt per capita increases, which requires raises on the yield of newly issued treasury securities to remain appealing to investors. This shifts the expenditures from governmental services to paying interest on securities, which will lead to a lower standard
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