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Planet Money

How much national debt is too much?

Jun 7, 2024
26:50
Snipd AI
Economists debate the risks of high national debt, with concerns about debt affecting economic growth. Analysis shows growth slows once debt exceeds 90% of GDP. The episode explores the US's $26 trillion debt, challenges policymakers face, and the balance between tax hikes and budget cuts.
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Podcast summary created with Snipd AI

Quick takeaways

  • High national debt above 90% of GDP may lead to significantly lower economic growth rates.
  • Debates ensue on the interpretations of the 90% debt threshold and its implications for economic growth.

Deep dives

Debt and Government Spending Strategies After the Financial Crisis

In 2009, following the financial crisis, the US government focused on increasing government spending and reducing taxes to stimulate the economy. The government's strategy included bailing out banks, tax cuts, and investing in infrastructure. Initially supported, this approach faced criticism from deficit hawks concerned about the growing national debt as it escalated from $6 trillion to $11 trillion by 2012. This rapid increase in debt raised concerns about interest costs and potential snowballing effects.

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