The following is part of an op-ed by economist Paul Krugman in The New York Times:
The United States government is more than $34 trillion in debt. Did you know that our government owes $34 trillion? That’s $34 trillion!
Whenever I write about economic policy, I get a lot of mail and a lot of comments basically asking why I’m not talking more about the national debt. So I thought it might be useful to talk about how I see the issue of public debt and why it doesn’t loom larger in my concerns.
Specifically, let me make three points. First, while $34 trillion is a very large figure, it’s a lot less scary than many imagine if you put it in historical and international context. Second, to the extent debt is a concern, making debt sustainable wouldn’t be at all hard in terms of the straight economics; it’s almost entirely a political problem. Finally, people who claim to be deeply concerned about debt are, all too often, hypocrites — the level of their hypocrisy often reaches the surreal.
How scary is the debt? It’s a big number, even if you exclude debt that is basically money that one arm of the government owes to another — debt held by the public is still around $27 trillion. But our economy is huge, too. Today, debt as a percentage of G.D.P. isn’t unprecedented, even in America: It’s roughly the same as it was at the end of World War II. It’s considerably lower than the corresponding number for Japan right now and far below Britain’s debt ratio at the end of World War II. In none of these cases was there anything resembling a debt crisis. . . .
Bear in mind that governments, unlike individuals, never have to pay off their debt. How did we pay off the debt from World War II? We didn’t. Federal debt when John F. Kennedy took office was slightly higher than it had been in 1946. But debt as a percentage of G.D.P. was way down, thanks to growth and inflation.
So what would it take to stabilize debt as a percentage of G.D.P. for the next 30 years? Bobby Kogan and Jessica Vela of the Center for American Progress, working with Congressional Budget Office numbers, estimate that we would need to increase taxes or cut spending by 2.1 percent of G.D.P.
That isn’t a big number! (Yes, the exact number could be either bigger or smaller, but in either case probably not by enough to change the basic point.) America collects a much smaller percentage of its G.D.P. in taxes than most other rich countries; collecting an extra two percentage points would still leave us a low-tax nation and would be unlikely to hurt the economy. If stabilizing debt seems hard, that’s only because given our deeply divided politics, even modest steps toward responsibility are extremely hard to take.
And by deeply divided politics I mostly mean Republicans, who declaim the evils of debt while pursuing policies that put long-run fiscal sustainability even farther out of reach. In a related analysis, Kogan and Vela estimate that permanently extending the 2017 Trump tax cuts — many of which are scheduled to expire after 2025 — would substantially worsen the fiscal outlook. Yet it’s hard to find Republicans in Congress opposing such an extension.
Worse yet, House Republicans are pushing for drastic cuts in the Internal Revenue Service budget, depriving the agency of the resources it needs to crack down on wealthy tax cheats. That is, even as they yell about budget deficits, they’re both seeking to cut taxes and trying to block efforts to collect the taxes high-income Americans owe under current law.
So politics — specifically right-wing politics — rather than the size of the debt is the problem.