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Another reason to worry about the federal debt bomb

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01/03/2013

Over at EconLog Bryan Caplan makes some very interesting and important observations on “How I Was Wrong About Government Debt.”

Most economists when gauging the impact of the massive government debt on the economy compare Debt to GDP, but per Caplan:

The right comparison is government debt relative to annual tax revenue. By this correct measure, the U.S. is indeed in irresponsible territory. Take 2011: With government debt at 67.7% of GDP, and government revenue at 15.4% of GDP, the U.S. debt/income ratio was already about 440%.

He adds, “Now I’m actually worried.”

The real issue is not the debt but the size and impact of the government at all levels.

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