US Debt and Deficits: Time to Reverse the Trend

Abstract

This article provides a primer on budget deficits from the creation of the federal government. Today federal government spending is 24% of GDP (compared with its historical average of 8.8%), fuelling debt of historic levels. The only effective way to reduce debt levels is to cut entitlement programmes and then set a tax rate sufficient, over the course of the business cycle, to fund government spending.