Paying for the debt

Date posted: January 10, 2013

If you divide the current level of the national debt by the number of people in the country, each person’s share comes to over $50,000. Does this mean one day we will all get a bill in the mail for $50,000? N.C. State University economist Mike Walden responds.

“In fact I had a family recently … that had a new child contact me on this. They were very worried. They were trying to be very good parents and looking ahead at their child’s financial future, college, other expenses. And they were worried that, ‘Hey, do we have to set aside some money to pay this big debt bill? Is someone, are we going to get … a bill in the mail saying pay the government $50,000?’

“Well the answer is, no, that’s not going to happen. The federal government is not going to send each of us at any point in the future a big bill. Indeed, the federal government has a perfect track record of always paying the interest on the national debt as well as the principal on time. The debt can be turned over and refinanced.

“But what it may imply if there aren’t changes is we may see our tax rates go up. Now, of course, that depends on where you are in the tax system as to whether you will have a significantly higher tax bill or simply a small increase.

“Also going in the favor of the federal government right now … is the very low interest rates. In fact, interest on the national debt today is as low as it was in 2000, even though the debt has gone up by more than three times.

“So, I think there (are) certainly … a lot of issues with the national debt, but one of them is not that each of us one day is going to get a bill for this gigantic cost or share of the national debt.”

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