Planet Money A thought experiment on how to fix the national debt problem
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Jul 2, 2025 Explore how the U.S. national debt skyrocketed to $30 trillion and the historical lessons that can be learned from post-World War II. Economists discuss using economic growth as a remedy for debt, emphasizing innovative strategies like tax cuts and bolstering R&D funding. Discover how adjusting immigration policies could enhance productivity and reduce deficits. Additionally, the podcast tackles infrastructure challenges and regulatory reforms needed to stimulate economic growth while balancing the responsibilities of national debt management.
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National Debt Surge and Risks
- The U.S. national debt rose drastically from $3 trillion to nearly $30 trillion over 25 years due to wars, bailouts, tax cuts, and stimulus spending.
- Now the government spends more on debt interest than on national defense, raising fears of a fiscal crisis if unchecked.
Growth Outpaced Debt Postwar
- Post-World War II, the U.S. managed a massive national debt by growing the economy rather than slashing spending or raising taxes.
- Economic growth outpaced debt increase, stabilizing finances within decades without drastic fiscal cuts.
Growth as Debt Solution
- Economic growth could help solve the debt problem by increasing tax revenues naturally.
- Even a small annual boost in productivity growth (0.5%) could stabilize or reduce debt growth over decades.