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Why The Federal Debt Matters

February 15, 2019

Dr. Raymond Robertson

Some recent editorials have suggested that the national debt, which this week surpassed $22 trillion, is nothing more than a political football to carry only when it’s politically convenient.

But according to Dr. Raymond Robertson, an economist at Texas A&M University Bush School of Government & Public Service, there are plenty of reasons why ever-increasing U.S. government debt is a real policy issue that should urgently concern Americans. He highlights a couple of them in “Two More Reasons Why the Federal Debt Matters” published in the latest Takeaway.

Robertson argues that the U.S. 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 U.S. debt.

The article also includes graphs illustrating how U.S. debt and trade deficits tend to rise and fall together. Robertson explains why addressing the U.S. federal debt would be a far more effective way in the long-term to strengthen U.S. trade than imposing tariffs, which can only temporarily improve the trade balance before the exchange rate rises and cancels out the effect of the tariffs.

The Takeaway is a publication of the Mosbacher Institute for Trade, Economics, and Public Policy at the Bush School at Texas A&M University.

 

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