least two questions really … B u s i n e s s F i n a n c e

least two questions really … B u s i n e s s F i n a n c e

Mega-discussion: U.S. national debt and federal government responses to the Covid-19 pandemic.

In this mega-discussion (multiple credits), we’re going to look at U.S. debt in context. We’re looking specifically at the impact on the national debt of the CARES Act through the American Rescue Plan of 2021: government responses to the Covid-19 pandemic

You’ll find attached some articles from newspapers and other media sources about the borrowing history of the U.S. Government. The baseline (preexisting) deficit (1st chart) and debt (2nd chart) situation is shown by the following charts.

Based on the Congressional Budget Office (CBO) score-keeping and projection, here’s the national debt over history and projected into the future as a percentage of Gross Domestic Product (GDP). Think of GDP as our national paycheck (it actually measures output), so you get the analogy with, say, mortgage lenders who judge homebuyers’ capacity to afford their monthly payments as a percentage of their earnings.

The dotted line represented the boundary between past and future (then, about 2 years ago), when debt-to-GDP ratio was 71%. The debt growth was supposed to exceed GDP (100%+) about halfway through the future 30 years (to the right of the dotted line). According to CBO’s latest (last week), it’s going to happen a dozen years earlier than forecast… 2020!

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