The Pros And Cons Of National Debt

The United States has had a tremendous problem with their national debt over the years because they repeatedly borrow money for funding programs, paying off other debts, or to increase spending on military. Moreover, the United States government continuously borrows money they do not have, and this makes the future uncertain for the government and citizens too. Future generations will pay off the debt because there is no other way to obtain money unless the government borrows more or taxes the citizens higher. The national debt is also connected to deficit spending, a budget surplus, and a balanced budget. Spending and budgets affect the national debt immensely but in different ways. Spending raises the debt while a budget attempts to stabilize …show more content…
The government borrows money for various reasons like programs, projects, bailouts of companies, and more. As the government borrows more money, this increases the national debt. Furthermore, a high national debt is bad for the country and citizens. As the debt rises, the interest rate will rise too. Thus, a con of the national debt is the private sector will have no interest in borrowing money with a higher interest rate, and citizens may have to pay higher taxes to compensate for the high national debt. When the government decides to borrow more money, the interest payments they are paying on now for their current debt will increase as well. The country will struggle to pay on a high interest rate along with paying off their past debt too. Another con of the national debt is it causes economic growth to slow down. If the national debt grows, interest rates and how much the government owes increases, and then the government will spend all their resources and money on paying off the debt. The government could use their resources, time, and money on programs, creating new jobs, and helping businesses, but they have to pay off their debt. Interest payments and high interest rates get in the way of the government expanding the economy. Moreover, the national debt slows down economic growth in the private sector with higher interest rates. Therefore, the private sector will have negative outcomes, and the private sector will borrow less money. With the private sector borrowing less money and less money circulating in the economy, the unemployment rate goes up, aggregate demand decreases, and a recession may occur. The items listed before all slow down economic growth. This is another con of national debt because it affects the private sector, job security, and economic growth in bad ways. A negative of the national debt is taxes may rise in the future to produce higher revenues for the government