文档介绍：CHAPTER FIFTEEN
Government15 Debt
Blessed are the young, for they shall inherit the national debt.
— Herbert Hoover
When a government spends more than it collects in taxes, it borrows from the
private sector to finance the budget accumulation of past borrowing
is the government debt. Debate about the appropriate amount of government
debt in the United States is as old as the country Hamilton be-
lieved that “a national debt,if it is not excessive, will be to us a national blessing,”
whereas James Madison argued that “a public debt is a public curse.”Indeed, the
location of the nation’s capital was chosen as part of a deal in which the federal
government assumed the Revolutionary War debts of the states: because the
Northern states had larger outstanding debts, the capital was located in the
South.
Although attention to the government debt has waxed and waned over the
years, it was especially intense during the last two decades of the twentieth cen-
tury. Beginning in the early 1980s, the . federal government began running
large budget deficits—in part because of increased spending and in part because
of reduced taxes. As a result, the government debt expressed as a percentage of
GDP roughly doubled from 26 percent in 1980 to 50 percent in 1995. By the
late 1990s, the budget deficit e under control and had even turned into
a budget surplus. Policymakers then turned to the question of how rapidly the
debt should be paid off.
The large increase in government debt from 1980 to 1995 is without prece-
dent in . history. Government debt most often rises in periods of war or de-
pression, but the United States experienced neither during this time. Not
surprisingly, the episode sparked a renewed interest among economists and poli-
cymakers in the economic effects of government debt. Some view the large bud-
get deficits of the 1980s and 1990s as the worst mistake of economic policy since