Federal Debt vs. State Debt


The CATO Institute published the following essay detailing how the states are doing a better job of managing tax revenues.

Is the federal government’s debt too large?

  • Federal debt held by the public of $26 trillion amounts to almost $200,000 for every household in the nation.
  • At 98 percent and rising, federal debt as a percentage of gross domestic product (GDP) will soon hit a record high.
  • Debt‐​to‐​GDP ratios above 90 percent slow economic growth,
  • High and rising debt could trigger a major economic crisis.

So, yes, federal debt is far too large.

More evidence comes from comparing federal debt to state government debt. Out‐​of‐​control federal debt contrasts with stable and legally constrained state debt. This article looks at the rules and metrics used by the states to control debt. Federal debt is vastly higher than what state policymakers would think is prudent.

Nearly all the states have balanced budget requirements for their operating budgets, but most borrow to fund some of their capital expenditures. All states recognize that debt is costly and risky, and so they impose constitutional, statutory, and procedural restrictions on it. State finance agencies and credit rating firms routinely examine state finances to ensure that debt is held to affordable levels.


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What do you think?  Isn’t it time to grant the states their Constitutional right to change the course of the country’s financial future?  How?  Contact your congressional leaders and ask them to vote for HCR-24, a concurrent resolution that will “Call a Convention” for the states to propose and citizens to vote on an amendment to restore financial stability.