[nikete]

It is worth to point out that one is a stock (debt) and one is a flow (GDP), and the right way of comparing them would be by taking the net present value of the flow, or comparing the cost of servicing the debt per year to GDP (so debt servicing cost climb to x percent of gdp).

[emrosenf]

According to this NYT article (http://www.nytimes.com/2009/11/23/business/23rates.html), debt service was $202B in 2009. It is projected to go to $700B in 2019.

To put that in perspective, $500B more than covers what we spend on education, energy, homeland security and the wars in Iraq and Afghanistan.

Of course, this assumes that our interest rates stay the same. I don't see how this is possible as our debt/GDP rises. I fear we are seriously choking ourselves.

[jrockway]

I don't think we are choking ourselves. Loaning money to the US government means the government can use all its resources to pay you back. We have not tapped any of those resources yet; taxes in the US are pretty low compared to the rest of the developed world.

Also keep in mind that the government can loan money at a higher interest rate than it can borrow it at. (I am not sure how much income this generates, though.)

[kiba]

Higher taxes might actually lead to lower tax revenues or a tax revolt. There's no such thing as a free lunch.

[philwelch]

We're not so far down the Laffer curve that raising taxes would lower revenues, and it's unlikely we will be anytime soon.

[jacobolus]

Moreover, the Laffer curve is mostly an absurdity.

Martin Gardner’s improved depiction: http://books.google.com/books?id=oXEaTdstD7gC&pg=PA133&#...

[bd_at_rivenhill]

On the other hand, technology has significantly reduced the cost of tax avoidance for high net worth individuals compared to what it was during the Clinton era.

[SkyMarshal]

>or comparing the cost of servicing the debt per year to GDP (so debt servicing cost climb to x percent of gdp).

Yeah, or yearly debt servicing cost vs yearly tax revenue, or delta debt servicing cost vs delta tax revenue.

The GDP component only hints at the underlying issues - what it costs us to service the debt, and what it would cost us to stop adding to it, and what it would cost us to pay it down the hard way.

[aufreak3]

Right. I had the same question about directly comparing the GDP figure versus the debt figure. It'll certainly help if someone knowledgeable lays bare the important factors and how they bear on the "rising debt" issue.