The U.S. federal debt exceeds $37 trillion, around 125% of national income (GDP). It is large and growing. Should we be worried? If the funds are used productively to make the U.S. more competitive, there is little reason to worry. However, worry is warranted if debt increases are due to tax breaks for the wealthy and are accompanied by deterioration in infrastructure, research, education, health and overall productivity. Here, I argue that the existing size of the debt is of limited concern but our current use of debt financing is of major concern.

Part I: Why not worry?

U.S. wealth, if invested in economic growth, is adequate to meet existing and future federal debt obligations. As an analogy, consider a family with $100,000 in income, a home mortgage of $200,000, plus $30,000 in credi

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