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Understanding The U.S. National Debt and It’s Future Implications

Daily Hampshire Gazette columnist Richard Fein, in a post yesterday on their website, provided a summary analysis of the U.S. National Debt and its implications for the future. Citing the potential for problems in arranging future debt service, coupled with the potential for “serious inflation,” Fein outlines the serious consequences ahead unless the growing debt problem is controlled.

Mr. Fein’s article articulately summarizes the magnitude of the borrowing and the attendant debt servicing problem and offers suggestions on possible solutions, specifically spending reductions. Unfortunately, omitted from his analysis is the simple fact that Social Security (which he cites as one of the four main spending categories) is by design a “closed system” that makes no direct contribution to the national debt. Social Security really has no borrowing authority, so what often gets lost in the rhetoric about the U.S. debt problem is Social Security’s self-financing design that had built a reserve of nearly $2.9 trillion just a few years ago. Of course, that reserve is now dissipating and will be totally exhausted by the early 2030s, but that’s a different issue.

Check out Mr. Fein’s National Debt analysis here.

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