A simple measure of the distributional burden of debt accumulation

AEI economists Aspen Gorry and Matthew (Matt) Jensen calculate the expected cost to households of different income levels to service the interest on America’s debt in a new paper.

  • Whose debt?: The authors study current levels of government debt, the debt accumulated by recent presidents, and the burden of future debt projected to accumulate under current law, current policy, and the Administration’s budget.
  • Who pays for existing debt?: If interest costs are financed in line with the progressivity of the federal tax system under current policy, a household with annual earnings between $50,000-75,000 would pay $1390.49 a year to service the current debt.
  • Who pays for future debt projected to accumulate through 2022?: Under current law, the Administration’s budget, and current policy, if interest costs are financed with federal taxes a household earning $50,000-75,000 would pay an additional:

 

  • Current law: $390
  • Administration’s budget: $880
  • Current policy: $1350

Read the full paper here

Aspen Gorry (aspen.gorry@aei.org) is a research fellow at the American Enterprise Institute, where Matt Jensen (matt.jensen@aei.org) is a research associate in economic policy studies.

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About the Author

 

Aspen
Gorry
  • Macroeconomist Aspen Gorry studies employment and tax policy. His research focuses on jobs, specifically on how labor market policies impact employment outcomes for young workers. He has written about the impact of minimum wages on youth unemployment, optimal taxation over a worker's life cycle and the importance of early career experience for workers' labor market outcomes. Before joining AEI, he taught economics at the University of California, Santa Cruz.

  • Phone: 435-797-2397
    Email: aspen.gorry@aei.org
  • Assistant Info

    Name: Regan Kuchan
    Phone: 202-862-5903
    Email: regan.kuchan@aei.org

 

Matthew H.
Jensen
  • Matthew Jensen is a research associate for economic policy studies. He maintains an active research agenda focused on public finance and taxation, and he coordinates the ongoing development of AEI’s International Tax Database. Jensen has written for The Wall Street Journal, US News, and Tax Notes, among others, and he frequently appears on radio and television. Before joining AEI, he worked for a hedge fund in Minneapolis.


    Follow Matthew Jensen on Twitter.

  • Email: Matt.Jensen@AEI.org

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