The Burden of the Debt and Future Generations in Local Finance

Abstract

In the recent past numerous and sometimes heated dialogues have taken place regarding the burden of public debt, its existence and its nature. Despite the apparent diversity among the analyses and conclusions of the parties to the dispute, certain broad similarities exist among the published writings. In particular, almost all of these works have been explicitly concerned with internal debt, debt which is both owed and owned within the same accounting entity, i.e., the portion of the federal debt held by citizens of the United States.1 Indeed, the traditional anti-burden arguments rest precisely on the internal nature of the federal debt. A large proportion of governmentally issued debt in the United States is not internal. Specifically, the large and growing quantities of debt issued by municipalities, school districts and, to a lesser extent, states is held primarily by individuals who do not reside within the boundaries of the