Is the national debt a problem?

Mark (Yes)

Not only is America's national debt a major problem, but if it continues to go unresolved, it will have irrevocable ramifications on the economy. The national debt is estimated to exceed 36 trillion dollars as of December 2024. Economists have extrapolated that this deficit will continue to increase into the next decade. This growing debt burden has weakened the US dollar, both here and abroad, undermined US creditworthiness, increased inflation, and produced market volatility. If we are indeed to enter into another recession on the scale of 2007-2009, we would be facing a potentially insolvent scenario along with national debt.

The urgency of our national debt is one of the few things that both Democrats and Republicans seem to agree on. In fact, over 70% of politicians across all parties feel that national debt should be a top three priority. If the US were to default on our debt, the impact on the economy could be catastrophic. This is because rising debt can create an illusory effect known as 'bezzle,' essentially presenting the idea that our economy is stable when, in fact, it is much like a credit card, with interest continually accumulating.

The last thing Americans need to contend with is a volatile economy. The national debt is going to continue to touch areas of our lives and have a negative impact, even if it appears to be initially benign. The most sensitive area that national debt is poised to impact is healthcare. If national debt is not addressed and rectified to some extent, it can be detrimental to medical advancements. Having just endured the most profound health crisis in modern history—COVID—healthcare has never been more important for lawmakers to consider in light of American saving.

Andrew (No)

The US’s national debt is fundamentally different from the personal debt that everyday people have such as credit card debt or mortgages. Unlike these types of borrowing, which have interest rates that can fluctuate significantly, national debt is relatively stable as treasury bonds are seen around the world as a safe haven for investors, meaning lending money to the United States is considered low-risk. This allows the US to borrow money at low interest rates because demand for Treasury bonds is relatively high. The ability to borrow at low interest rates is because it allows moderate inflation and economic growth to minimize debt taken on over time. Since the national debt is not going to balloon due to high interest rates, as long as the economy continues to grow at a rate higher than the interest rates the debt is actually very manageable. As the economy grows, tax revenues expand, giving the government more ability to service its debt. A regular and moderate amount of inflation also helps to undermine the actual value of debt.

Running a budget deficit is not unique to the United States. Most nations borrow money for various reasons, and the practice has become common following the turmoil of the Great Depression and the rebuilding efforts following WWII. It’s not surprising that the United States has a larger deficit than other nations, considering its economy's sheer size and dominance. Deficit spending can be thought of as an investment, with the programs it pays for paying dividends in future years. Without these investments, many of the programs ordinary citizens rely on would be slashed, seriously jeopardizing future economic security.