With respect to the recent spasm of angst over federal debt, consider this statistic. According to the St. Louis Federal Reserve Board, interest on the federal debt in 2023 was the equivalent of 2.4 percent of gross domestic product, the value of goods and services generated by the U.S. economy. Interest on the federal debt in 1991 was 3.1 percent of GDP. The percentage changes periodically along with expansion or contraction of the economy, interest rates in the Treasuries market and the duration for which the debt is incurred.
We do need better financial management. Borrowing forever is a poor plan. But we should keep the magnitude of federal debt in perspective. Those who propose radical solutions, massive immediate cuts to entitlements that go mainly to lower-income people or radically higher taxes on higher-income individuals and corporations or their accumulated wealth have agendas that go far beyond the need for responsible debt management. We should not conflate solving the debt problem with their broader agendas.
