# National Debt **URL:** \ **Category:** Cecil's Columns/Staff Reports\ **Created:** [December 19, 2003, 2:58pm UTC](https://boards.straightdope.com/t/national-debt/219971 "2003-12-19T14:58:38Z")\ **Posts on this page:** 5\ **Page:** 1
**Author:** ![pawnking](https://avatars.discourse-cdn.com/v4/letter/p/bcef8e/32.png) [@pawnking](https://boards.straightdope.com/u/pawnking)\ **Post date:** [December 19, 2003, 2:58pm UTC](https://boards.straightdope.com/t/national-debt/219971/1 "2003-12-19T14:58:38Z")
I’m no ecnomist, but an accountant. But one point that I believe the author left out was the idea that debt is a way of investing in the future. Let’s say the GDP was $1,000, and the tax burden was 10%, or $100. The government decides to use debt to invest in infrastructure, hoping this will stimulate the economy. The government borrows $10 to do this, payable over the next 10 years. Assuming a steady GDP, taxes will have to be 1% higher next year to pay off the debt, or actually 1.1% due to interest payments. However, let us assume that the infrastructure has a beneficial effect on the economy, and the GDP grows 5% as a result of the new roads, schools, etc. The GDP in year 2 would be $1,050, year 3 it would be 1,102, and so on. The tax revenues would be $105, $110, etc. The end result would be either a) more money for the government, or b) a lower tax bill. This is nothing more than what companies do, leveraging themselves to promote growth, then paying off the money they borrowed based on their higher income in future years. Thus debt on a national level can be seen as a way the government can stimulate the economy, hopefully in permanent ways, and can actually LOWER taxes in the long run. Who benefits from the Nation’s debt? Everybody. 🙂 ---
**Author:** ![hawthorne](https://avatars.discourse-cdn.com/v4/letter/h/c89c15/32.png) [@hawthorne](https://boards.straightdope.com/u/hawthorne)\ **Post date:** [December 19, 2003, 3:28pm UTC](https://boards.straightdope.com/t/national-debt/219971/2 "2003-12-19T15:28:59Z")
Welcome to the Boards, **pawnking**. A link is helpful: [Who benefits from the national debt?](http://www.straightdope.com/mailbag/mnationaldebt.html) I touched on the point you stresss in the last paragraph. It’s an important one. A government that doesn’t invest in infrastructure that will yield long-term benefits because it is afraid of any debt - or one that insists that the current generation pays for everything now - may be doing both current and future citizens a disservice. You could certainly argue that the former UK government’s obssession with the Public Sector Borrowing Requirement resulted in degraded infrastructure - or that the Australian government (which has negligble debt) is overtaxing current citizens and failing to invest sufficiently in its desire to maintain a surplus.\* It is of course tricky to work out what government spending is _really_ current expenditure and what’s capital (education spending for example). But the point is that whether an additional dollar of debt is a way of redistributing wealth towards the beneficiaries of current spending and tax cuts or an equitable way of financing projects with intergenerational benefits depends on the project. \*[sub]We do however have an election approaching, and the surplus is not likely to survive that.[/sub] ---
**Author:** ![C\_K\_Dexter\_Haven](https://avatars.discourse-cdn.com/v4/letter/c/b2d939/32.png) [@C\_K\_Dexter\_Haven](https://boards.straightdope.com/u/C_K_Dexter_Haven)\ **Post date:** [December 19, 2003, 4:52pm UTC](https://boards.straightdope.com/t/national-debt/219971/3 "2003-12-19T16:52:07Z")
And, **hawthorne** , congrats on the Staff Report! ---
**Author:** ![TheLoadedDog](https://avatars.discourse-cdn.com/v4/letter/t/35a633/32.png) [@TheLoadedDog](https://boards.straightdope.com/u/TheLoadedDog)\ **Post date:** [December 21, 2003, 11:38am UTC](https://boards.straightdope.com/t/national-debt/219971/4 "2003-12-21T11:38:15Z")
Yes mate. Bloody well done, cobber. ---
**Author:** ![Ice\_Wolf](https://avatars.discourse-cdn.com/v4/letter/i/dfb087/32.png) [@Ice\_Wolf](https://boards.straightdope.com/u/Ice_Wolf)\ **Post date:** [December 21, 2003, 11:42am UTC](https://boards.straightdope.com/t/national-debt/219971/5 "2003-12-21T11:42:00Z")
Excellent stuff, **hawthorne**.