The Federal Deficit and the National Debt
Why They Matter More Than We Think
Gary Clayton is professor of economics
at Northern Kentucky
University. He is the author of several
texts and has appeared on
numerous radio and television programs.
His primary interest is with
the use and interpretation of the
economic statistics that define and
measure well being. His web portal,
www.EconSources.com, was
described as “among the most useful [sites] on the web”
by the Federal Reserve Bank of Boston’s Ledger. He is a
year 2000 Freedoms Foundation Leavey Award winner
for Excellence in Private Enterprise Education, an
Association of Real Estate License Law Officials (ARELLO)
national Consumer Education Award winner, and
the recipient of a national teaching award from the
National Council on Economic Education (NCEE). He
holds a Ph.D. in economics from the University of Utah
and an honorary doctorate from the People’s Friendship
University of Russia (PFUR) in Moscow
Using historical data from the Office of Management and Budget, the Congressional Budget Office, and the Organization for Economic Co-operation and Development, the author argues that that the current method of expressing the federal deficit and/or debt as a percentage of GDP obscures the danger posed by potentially higher interest rates. While the debt and deficit may still be at manageable levels, the situation could deteriorate much quicker than we might imagine, substantially raising the government’s opportunity cost of servicing the national debt and diminishing the economic well being of American business and consumers.
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