Legislative Action to Improve the Fiscal Health of the United States and Reduce National Debt
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Date
2020-12
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Abstract
Fiscally focused policymakers and policy influencers raise concern over the increasing national debt of the United States. While the nation entered the twenty-first century in a state of relative low debt, debt has increased continuously since 2007. Advocates for debt control describe how increased national debt negatively impacts economic growth, income growth, insurance rates, crisis preparedness, and national security. These concerns have been substantially amplified as debt itself has been substantially amplified during the COVID-19 pandemic, and passage of the CARES Act. This memorandum proposes and recommends implementation of the debt reducing RODEO Act. RODEO will permit additional borrowing during the current health crisis, utilize debt control mechanisms which build upon tools used in previous such policies, and enforce a long-term implementation schedule which minimizes negative economic impacts. Targets will aim at a reduction of two percent annually; enabling economic growth and controlled spending to meet goals without additional taxes or programmatic cuts. CBO anticipates the debt to GDP ratio will be 105% by the close of 2022. The fourth of five RODEO targets requires the debt to GDP ratio to be 69% as early as 2046, or as late as 2060. The fifth target requires the ratio to be 60% by 2066. This gradual reduction of debt will create an enduring solution, improve the economic station and outcomes for citizens, and protect the position of the United States in the national stage.
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debt, deficit, debt control, CARES Act, United States