Two More Reasons Why the Federal Debt Matters
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DescriptionRather than growth generating additional tax revenues that would pay for the tax cuts of 2017, as predicted by nonpartisan economists, the US budget deficit rose 17% over fiscal year 2017. According to the author, there are plenty of reasons why the ever-increasing US government debt is a real policy issue that should urgently concern Americans. In this issue of The Takeaway he highlights a couple of them. Robertson argues that the US federal debt threatens national security and is associated with a higher trade deficit. In addition to other possible serious consequences, he points out the significant amount of leverage that China gains by holding so much US debt. The article also includes graphs illustrating how US debt and trade deficits tend to rise and fall together. Robertson explains why addressing the US federal debt would be a far more effective way in the long-term to strengthen US trade than imposing tariffs, which can only temporarily improve the trade balance before the exchange rate rises canceling out the effect of the tariffs.
Robertson, Raymond (2019). Two More Reasons Why the Federal Debt Matters. Mosbacher Institute for Trade, Economics & Public Policy. Available electronically from