Tackling the federal debt problem fairly

Abstract

Rising federal debt threatens to reduce the growth of the economy, people’s living standards, wages, and the standard of living. A policy solution needs to respect many constraints, most importantly, that it is seen as fair—both within generations and across generations. This article addresses concepts of fairness and their application to resolutions of the federal debt problem. The major conclusions are that policymakers should push only limited amounts of debt to future generations and that they should use the need to reform fiscal policy as a way to expand government investments in a wide range of programs—ranging from early childhood to higher education, from infrastructure to basic research. The resolution of these issues will also require progressive tax reforms.