National Debt: Is It A Bad Thing?

Why the #1 issue for so many well-intentioned conservatives is overblown…

There are people I like who are voting for Trump because “the national debt is way out of control”. Yet, many other smart, caring politically-savvy people don’t care about the national debt, so I decided to research that curiosity.

Here are a few things I learned…

National debt is *not* like the debt of an individual, family, or business.

This is a frequent misunderstanding. Just because it’s called “debt” doesn’t mean it’s the same as your personal debt, nor is it like a family’s or business’ debt.

National debt is a very different thing.

America “has been granted the presumption of immortality by its creditors… [and thus faces] no final day of reckoning on which all debts need to be repaid.”

You would think that quote is from some liberal. To the contrary, it is from the respected conservative economist Gregory Mankiw, who chaired the Council of Economic Advisers under George W. Bush, and served as an economic advisor for Mitt Romney’s presidential campaign.

Investors worldwide (and here in America) want *more* US Debt.

US treasury security interest rates are at an all-time low:

Chart Source: TradingEconomics.com & US Department of Treasury

This means investors (the market) want more US debt because it gives them greater financial security, thereby allowing more stable wealth creation.

The USA can keep borrowing more money, as long as our long-term economic prospects look good (and it does), and as long as our credit rating is good, which brings me to this finding…

The United States has one of the best credit ratings in the world.

And there’s no sign of that changing.

2 out of the 3 major credit rating agencies (Moody’s & Fitch) gives USA the highest credit rating possible.

The third agency (S&P) lowered America’s credit rating slightly, given our volatile politics for the past 8 years… they now give us AA+ rating. Not bad at all.

Our “lower” rating still gives us a higher credit rating than these other major economic powers…

  • China
  • Russia
  • United Kingdom
  • Japan
  • France
  • Italy
  • Brazil
  • and The European Union

Despite our growing government debt, the credit rating on our national debt has a stable (safe) outlook, according to the latest reports (2014–2016) from the major credit agencies.

Want a better economy and less national debt?

In my research, I started to wonder: which political party in the Oval Office is likely to create more economic growth — which in turn, grows our tax revenues and eases our national debt?

“Income growth is faster, and more equal, under Democratic presidents.”

See the quote source, along with 5 helpful charts.

Democrats tend to raise taxes on the wealthy which gives more money to pay down the national debt. They also lower taxes on the poor and increase the minimum wage which has these effects:

  • stimulates more consumer spending
  • grows the economy
  • increases total tax revenues
  • ….which further helps ease the national debt
from Salon.com article 5 charts showing how the economy does better under Democratic presidents

Also, Democratic administrations (see the blue bars below) have tended to make the important ratio of debt-to-GDP healthier…

Chart from PoliticsThatWork.com

So let’s do 2 things…

  1. Stop stressing out about the national debt.
  2. Vote for policies that have proven to grow the economy. The simplest way to do that? Vote for a Democratic president.

Written by

Authentic Business Coach & Author of 4 Books including "Authentic Content Marketing" and "Joyful Productivity" https://www.GeorgeKao.com

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