The $8.7 trillion in government debt held by the public is 64 percent of the gross domestic product - the amount of goods and services produced in the United States in a year - according to the International Monetary Fund. Growth of the debt is out of control, the IMF has warned.
Consider this: If you have a child born today and he goes on to attend college, the publicly-held debt will double to 135 percent of GDP before he graduates, according to IMF projections. That grim level will be reached in 2030 at the current rate of expansion. Also consider that the total U.S. debt is $13 trillion, including that held by other governments.
Stronger measures need to be taken to curb growth of the U.S. debt, the IMF has urged. While the international agency reported the U.S. economy does seem to be pulling out of recession, continued reliance on deficit spending will wreck it in the future.
The IMF report recommends government spending cuts as one method of curbing deficit spending. But the agency seems to place more reliance on tax increases as a way of getting the U.S. budget closer to balance. One possibility is a national sales tax, the IMF suggests.
While we agree that deficit spending needs to be curbed, we wonder whether IMF economists considered the effect of massive tax increases. Forcing consumers and businesses to bear most of the burden of balancing the budget would plunge the economy back into recession - or worse.
Yes, the national debt is a major worry. But no, dumping the burden of dealing with it on consumers and businesses is not a good strategy.