Marc Abear: Can we grow our way out of national debt?

To The Daily Sun,

Can policy changes boost economic growth enough, at low enough cost to meaningfully reduce federal budget deficits? No, growth enhancing policies alone cannot stabilize federal debt on their own. We no longer have any reasonable expectation of growing our way out of debt.

Pro-growth economic policies can reduce the size of required tax hikes and/or spending cuts needed to stabilize debt. There are seven relevant areas of economic policy: high-skilled worker immigration, housing regulation, safety net programs, electrical transmission regulation, governmental subsidy of research and development, business tax policy, and infrastructure construction permitting that should be studied and considered as helps in mitigation of deficits and debt.

Publicly held debt of the U.S. government now equals gross domestic product. America is nearing the highest debt-mark in history. We are at a level of debt about twice the average of the past 50 years.

The Congressional Budget Office (CBO 2025a, 2025c) projects federal debt will rapidly rise relative to output under current policies. The current path cannot be sustained.

This is important because as debt rises, national savings and the domestic capital stock are diminished. Worse, the government’s capacity to respond to emerging problems is reduced, and the risk of a fiscal crisis is intensified. Many policymakers are expressing their desire to reduce or eliminate federal budget deficits and to take the trajectory of debt negative.

While economic growth in the U.S. has been strong in recent years compared with growth in most other advanced economies.

We are the best competition among some very weak competition. Our pace of growth has been well below the average U.S. experience of the past half century.

Faster economic growth helps working people achieve better living standards and helps provide for rising retired population. Policymakers should seek ways to get government out of the economy.

Marc Abear

Meredith