While raising taxes and cutting spending can solve our debt problem, a better approach is to foster faster growth! If an increase of 1% in the economy’s growth rate were maintained over the next decade, the debt-to-GDP-ratio in 2023 would be reduced by 17 percentage points and our fiscal problems would be largely solved. And, tax reform via lowering rates and broadening the tax base is how to do it.
Tag Archives: debt-to-GDP ratio
Oh Canada!
Having largely sidestepped the Great Recession, Canada is starting to look slightly shaky. House prices rose for the 19th straight month in October (been there) and household debt/GDP is 90% in Hockey Country while here it’s 77% after topping 90% in 2008. Worse, GDP in Q3 is almost at a crawl and their top-notch central banker, Mark Carney, switched teams and will now be Governor of the Bank of England.
Euro-Zoned Out!
Due to German-inspired excessively speedy austerity in Greece, Spain and Portugal, (GSP) the Euro-zone economy is quickly entering a needless recession. Worse, the GSP economies are shrinking by more than the spending cuts and tax increases they’re imposing, thus worsening their debt-to-GDP ratios. Moreover, Moody’s just downgraded French sovereign debt to one level below AAA, and the agencies will surely soon downgrade Spanish sovereign debt to junk.