National and Class Consequences of the Federal Debt

Abstract

The national debt is typically portrayed as a national problem without regard to how it affects different classes. There has been a great deal of recent debate over how destabilizing or dangerous the debt is to the U. S. economy, but little discussion of how the debt functions distributionally. This paper examines how the debt functions to widen existing inequalities-not only through the creation of an ongoing structural budget deficit, but also by subsidizing the investment opportunities for wealthy Americans. After a discussion of these issues, this paper uses regression analysis on data from the past 40 years and discovers a high level of correlation between income inequality and the proportion of national income that pays interest on the debt.