Policies to Reduce Federal Budget Deficits by Increasing Economic Growth

April 22, 2025, Paper: "Publicly held debt of the U.S. government is now roughly equal to annual output, nearly the highest mark in history and about twice the average of the past fifty years. More worryingly, the Congressional Budget Office (CBO 2025a, 2025c) projects that federal debt will rise rapidly further relative to output under current policies. That path cannot be sustained indefinitely, and as debt rises, national savings and the domestic capital stock are diminished, the government’s capacity to respond to emerging problems is lessened, and the risk of a fiscal crisis is intensified. Prudent policymakers would act sooner rather than later to reduce federal deficits and lower the trajectory of debt (Dynan and Elmendorf 2025)."