Question

Deficits do not necessarily burden future generations. Discuss and provide some examples.

Answer 1

U.S. public debt is not necessarily a burden to future generations of Americans. If the U.S. government uses funds to pay for useful programs, such as make investment in productive assets - building or repairing infrastructure, improving schools, researching new ideas, and if such productive assets have real rates of return that exceed the rate at which the government borrowed, will not be a burden on future generations. The U.S. national debt was not only a liability, however also an asset. For example: programs such as education provide benefits primarily for younger generations; and programs such as Social Security, tax younger generations have benefits primarily for older generations. When the government increases the deficit, older generation can increase their saving and provide these savings to younger generations to offset the delayed tax burden.