logo

Why is national debt increasing?

1. The government spends more than it collects in taxes and borrows money to continue to spend

2. Government will never use surplus tax to pay down debt. As a result, 45 out 50 years, the government has run a deficit.

3. Government believes debt can be used to invest in productive capital to support economic growth. Government debt is expected to increase 50 percent over between 2016 and 2026. Larger portions of tax revenue go to financing debt and pay interest. The fed buys government debt keeping interest rates from climbing. Low economic growth suggests government investment in capital growth is minimal and the economy will continue to move forward in an anemic manner. Government tax revenues decrease during slow economic times. Higher tax percentages will apply in the form of increased payroll taxes. Higher taxes are associated with higher interest rates. The government is not concerned about affordable budgets. It is not concerned with spending constraints with debt ratios exceeding 75% of GDP. (http://www.heritage.org/research/reports/2013/06/the-many-real-dangers-of-soaring-national-debt)

4. Inflation will continue to grow at 6.5% as government spending continues to grow.

5. Interest rates rise in anticipate of debt risk required by creditor nations.

6. Government spending crowds out private capital growth. Government borrowing subtracts from domestic saving and lessens private borrowing against those funds.

7. Foreign countries like US debt because of the US is a large industrial and high technology country and it respects the rule of law.

8. Once debt gets large enough than the markets notice then interest rates rise, suddenly.

s