RustyNails said:
Except since the U.S. government is basically immortal for the purposes of this discussion, that debt spreads over generations, so it is misleading to think of it as every citizen carrying a debt burden of that level that they will need to pay off in their lifetimes.
In addition, population growth, productivity growth, and general (we hope) economic growth also need to be considered. We ran up a lot of debt fighting WW2, for example, but since the economy was bigger in the 50's than it was in the 30's and 40's, that debt was easier to pay off than it would have been.
Here is something that I can't understand. Assuming that the analogizing of government budgets to that of households and businesses is accurate, even though I don't believe it is, I don't see how treating the government like either of these two entities implies that we should be worrying about debt right now.
Depending on how it is calculated, the most pessimistic number that I've seen is that debt is at, or will soon hit, 100 percent of GDP, meaning that our debt level will be equal to the total value of all goods and services produced by the U.S. in a given year.
That sounds scary, but it really isn't when you consider that, even in the "good old days", when households and businesses weren't up to their own eyeballs in debt, people used to need to take out a mortgages that were twice their yearly salaries in order to afford a house. That means, if they were a government, they would have a debt to income ratio of 200 percent. Now, of course, many people are carrying much higher debt loads in order to afford housing, or even higher education.
So, if we were to hold households to the same standard that we are supposedly holding the government, nobody would ever buy a house. I doubt many people would start a businesses or attend college either. I even doubt many businesses would be able to expand.
