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Karl W. Smith

How to Win the Coming Battle Over the U.S. National Debt

It’s not too soon to start thinking about the best way to bring back fiscal order after the pandemic subsides.

Now what about that deficit?

Now what about that deficit?

Photographer: Pool/Getty Images North America

Even non-partisan deficit hawks support the $2.2 trillion coronavirus relief package that President Donald Trump signed last week. Once the pandemic has subsided, however, the calls to rein in the deficit will be deafening. It’s not too soon to start thinking about how to do that — without crippling the economy or creating further hardship for families that have just endured the greatest public health crisis in a century.

There’s no doubt the deficit will be a major issue. When combined with lost tax revenue from shuttering large parts of the economy, the increase in total U.S. national debt over the next year could easily exceed $4 trillion. (In the coming years, total U.S. debt relative to GDP is likely to exceed the record levels experienced after World War II.) In addition, unless the U.S. gets very lucky, the economy will still be weak even after the outbreak, with annual budget deficits topping $1 trillion.