"Neither a borrower nor a lender be," Polonius advises his son in Shakespeare's Hamlet. If everyone followed this advice, the "Federal Deficits, Surpluses, and the National Debt" chapter in the economics textbooks would be unnecessary. In the US, debt has been a part of the country's operations since its beginning. The US government first found itself in debt in 1790, following the Revolutionary War. Since the US government almost always spends more than it takes in via taxes and other income, the national debt continues to rise. The national debt level has been a significant subject of US domestic policy controversy. Economists and policy analysts disagree about the consequences of carrying federal debt. Some worry that excessive government debt levels can impact the strength of the currency in trade, economic growth, unemployment, and ultimately economic stability and national security. Others (for example, the Modern Monetary Theory) believe that government debt is irrelevant when the central bank can print limitless fiat money, and hence the national debt is manageable and people should stop worrying. You have been hired as an economic consultant to your state's US Senator or Congressional Representative.

Briefly describe the US federal budget and the national debt. There are several issues to be covered in the brief including, but not limited to, the following:

• Describe the recent trend (approximately during the last 20 years) that is occurring with the federal deficits and the national debt in the US. What were/are the primary drivers of the federal deficits and the rise in the national debt?
• Who owns the US national debt? In your opinion, should we worry about the national debt?
• What consequences would a large and growing national debt have in the long run?
• What are the policy options for dealing with the skyrocketing national debt?

Resources

https://www.cbo.gov/topics/budget

https://fiscaldata.treasury.gov/

https://www.usdebtclock.org/