A simple measure of the distributional burden of debt accumulation

 

Distributional analysis is an important feature in discussions of fiscal policy changes.  While changes in taxes and spending are typically subject to distributional scoring, the distributional costs of changes in net debt are generally ignored. This paper proposes a measure of the distributional burden of servicing the debt. Our primary measure constructs the real annual cost of servicing the debt for households at various levels of income. The distributional burden of the debt depends critically on the level of interest rates and the manner in which the debt service is financed. Using alternative assumptions about financing, we assess the distributional burden of the current level of government debt and the burden of future debt projected to accumulate under current law, current policy, and the Administration’s budget.

Also Visit
AEIdeas Blog The American Magazine
About the Author

 

Aspen
Gorry

 

Matthew H.
Jensen

What's new on AEI

Study: Piketty tax plan would boost equality by making rich less rich. But poor would be poorer, too
image Rep. McCaul’s cybersecurity information sharing center: If you build it, will they come?
image Halbig and its aftermath
image Culture of how Washington pays for medical care
AEI on Facebook
Events Calendar
  • 28
    MON
  • 29
    TUE
  • 30
    WED
  • 31
    THU
  • 01
    FRI
Tuesday, July 29, 2014 | 10:00 a.m. – 12:00 p.m.
Is Medicare's future secure? The 2014 Trustees Report

Please join AEI as the chief actuary for Medicare summarizes the report’s results, followed by a panel discussion of what those spending trends are likely to mean for seniors, taxpayers, the health industry, and federal policy.

Event Registration is Closed
Friday, August 01, 2014 | 10:30 a.m. – 12:00 p.m.
Watergate revisited: The reforms and the reality, 40 years later

Please join us as four of Washington’s most distinguished political observers will revisit the Watergate hearings and discuss reforms that followed.

No events scheduled this day.
No events scheduled this day.
No events scheduled today.
No events scheduled this day.
No events scheduled this day.
No events scheduled this day.