Not saying the additional trillions in debt are a good idea, but they also need to be viewed in the context of the rate of economic growth. If GDP grows faster than the nominal debt increases, then debt / GDP will decline. And if GDP can grow 1-2% faster than the debt over the course of a decade, there can be a material decline in debt / GDP. So it’s in all our interest to hope that de-regulated, growth-oriented economic policy can generate this outcome.
Chris, I was wondering about the numbers there as well. "This bill will add $3-6 trillion to the debt over the next decade." However, we added $16.79 trillion to the debt over the past decade. So is the phrasing I'm hearing everywhere wrong or are we actually decreasing the amount we are adding to the national debt each year and making that sound bad?
I’m not a master of the numbers, but Bessent has been vocal about getting the annual deficit down to 3% of GDP. I’m sure some of the assumptions in the bill are suspect, but I do believe awareness is growing in Washington that we can’t keep spending our way into oblivion.
Plus, the baseline looking forward certainly doesn’t embed the extraordinary levels of COVID spending, so, yes, we’re aiming to be on a trajectory of far lower per annum deficits.
And if the economy does keep growing at a nominal clip in the 4-6% annualized range, debt/GDP does have a fighting chance of declining even at increasingly absolute levels of debt.
Not saying the additional trillions in debt are a good idea, but they also need to be viewed in the context of the rate of economic growth. If GDP grows faster than the nominal debt increases, then debt / GDP will decline. And if GDP can grow 1-2% faster than the debt over the course of a decade, there can be a material decline in debt / GDP. So it’s in all our interest to hope that de-regulated, growth-oriented economic policy can generate this outcome.
Chris, I was wondering about the numbers there as well. "This bill will add $3-6 trillion to the debt over the next decade." However, we added $16.79 trillion to the debt over the past decade. So is the phrasing I'm hearing everywhere wrong or are we actually decreasing the amount we are adding to the national debt each year and making that sound bad?
I’m not a master of the numbers, but Bessent has been vocal about getting the annual deficit down to 3% of GDP. I’m sure some of the assumptions in the bill are suspect, but I do believe awareness is growing in Washington that we can’t keep spending our way into oblivion.
Plus, the baseline looking forward certainly doesn’t embed the extraordinary levels of COVID spending, so, yes, we’re aiming to be on a trajectory of far lower per annum deficits.
And if the economy does keep growing at a nominal clip in the 4-6% annualized range, debt/GDP does have a fighting chance of declining even at increasingly absolute levels of debt.