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Noah Smith

Debt Keeps Rising and Nothing Bad Happens

Economists are stumped.
The answer was clearer back then.

The answer was clearer back then.

Source: Bettmann/Getty Images

As the Republicans prepare for their big tax reform push, the issue of deficits and debt is once more coming to the fore. Many economists realize that tax cuts, especially income tax cuts, tend to increase deficits, which over time lead to increases in the national debt. The GOP plan, if adopted, probably would pump up both deficits and debt. This isn’t the first time that’s happened, of course -- Presidents Ronald Reagan and George W. Bush also cut taxes and deficits swelled:

So the question is: Is more debt good, bad or does it even matter? But if it’s bad, how serious a problem is it?