“A national debt if it is not excessive, will be to us a national blessing” - Alexander Hamilton
Outline
There are roughly two ways to think of debt. At an individual level, you’re drawing the wealth of tomorrow into the present. But at the aggregate level, you’re really just shuffling resources around.
In this note, we will consider the impact of federal debt. To do so, we’ll start by looking back at Reagan. There’s a lot about Reagan’s time period that remains pertinent today — as I am writing this, I am reading Thomas Merrill’s The Chevron Doctrine which refers to a 1984 case which shaped how Courts are to evaluate agency’s interpretation of a Statue. But the part of Regan that I’d like to focus on is how his administration handled the debt — specifically how it attempted to balance tax cuts with expenditure cuts.
The federal debt is an often discussed issue, in part because it’s really big — the U.S. government spends about $1 trillion annually on interest (Source). And also because people don’t really agree on how big a problem it really is.