A simple measure of the distributional burden of debt accumulation

AEI economists Aspen Gorry and Matthew (Matt) Jensen calculate the expected cost to households of different income levels to service the interest on America’s debt in a new paper.

  • Whose debt?: The authors study current levels of government debt, the debt accumulated by recent presidents, and the burden of future debt projected to accumulate under current law, current policy, and the Administration’s budget.
  • Who pays for existing debt?: If interest costs are financed in line with the progressivity of the federal tax system under current policy, a household with annual earnings between $50,000-75,000 would pay $1390.49 a year to service the current debt.
  • Who pays for future debt projected to accumulate through 2022?: Under current law, the Administration’s budget, and current policy, if interest costs are financed with federal taxes a household earning $50,000-75,000 would pay an additional:

 

  • Current law: $390
  • Administration’s budget: $880
  • Current policy: $1350

Read the full paper here

Aspen Gorry ([email protected]) is a research fellow at the American Enterprise Institute, where Matt Jensen ([email protected]) is a research associate in economic policy studies.

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About the Author

 

Aspen
Gorry

 

Matthew H.
Jensen

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