As recently as 2007, the amount of federal government debt—Treasury securities held by the public—was just 35% of gross domestic product. At the end of 2019, it was 79%, and it’s likely to hit 104% in 2021. It only gets worse: The debt will likely rise to 109% by 2030 and approach 200% of GDP by 2050, according to estimates from the Congressional Budget Office. Those estimates don’t include another fiscal stimulus (which was being negotiated at press time) and assume Congress won’t extend tax breaks scheduled to expire in 2025.
For most of us, that kind of balance sheet would be ruinous. Interest rates would eat away at our income, making it difficult to pay expenses. Certainly, that has been the traditional view of the federal government’s debt: As rising deficits increase the amount of interest the government must pay each year, there’s less money available for other things. There have also been concerns about what would happen if China and other foreign investors were to stop buying Treasury securities. A deluge of debt would flood the market, and interest rates would have to rise to entice investors to buy it. That would cause interest rates on consumer and business loans to follow suit, which would hurt the economy.
Continue reading your story on the app
Continue reading your story in the magazine
The Virtues of Volunteering
My column on fulfilling ways to spend retirement (“Living in Retirement,” April) continues to generate inspirational responses from readers, many of whom have sung the praises of volunteering. You also volunteered the names of additional service groups that you have found rewarding. I’ll cite a number of them for those of you in search of a cause that strikes a chord.
The Benefits of Working Longer
Delaying retirement for a couple of years—or even a few months— is the most effective way to improve your retirement security.
Finally, on the Brink of Dow 36,000
In early 1998, my American EnterpriseInstitute colleague Kevin Hassett, a well-credentialed academic who would later become chairman of the Council of Economic Advisers during the Trump administration, came to me with an idea. Over the previous three-fourths of a century, stocks had returned an annual average of about 11% and government bonds 5.5%.
Limit Losses With These ETFs
The catch: You’ll give up some gains in return.
BET ON INFRASTRUCTURE STOCKS
On the heels of a $1.9 trillion COVID relief bill, President Joe Biden has unveiled a major infrastructure initiative that would spend $2 trillion over eight years, financed in part by an increase in corporate tax rates from 21% to 28%.
Get Dividends Every Month
One way for income-hungry investors to keep cash flowing is to assemble a portfolio that shells out dividends every month.
Earn Up to 10% on Your Money
Yields are beginning to lift off. We found great deals for every level of risk.
How to Surf the Net More Safely
To help you fight identity theft, consider adding a VPN.
Tap Home Equity for Extra Income
Home is where the heart is, but it’s also a source of regular income for many retirees.
THE COMPLETE GUIDE TO CAR RENTALS
Get up to speed on how to snag a deal and avoid pesky fees.
