The real debt crisis is low taxes

WASHINGTON’S favourite show, “Debt Ceiling Chicken”, is playing again in the big white theatre on Capitol Hill. And once again, it is diverting attention from the fact that the United States really does have a debt problem.

Republicans and Democrats in recent decades have hewed to a kind of grand bargain, raising spending and cutting taxes, and papering over the difference with a lot of borrowed money.

From 1972 to 2021, the government, on average, spent about 20.8 per cent of gross domestic product (GDP) while collecting about 17.3 per cent of GDP in revenue. It covered the gap with US$31.4 trillion in IOUs – the federal debt.