2.4: Debt Targets

Set sustainable debt targets.

Other Information:

As its name suggests, a debt target would be an explicit ceiling of the nation's publicly held debt. Debt targets are generally expressed as a percent of the country's gross domestic product, or GDP. Currently, Congress and the President have some control over the national debt: they must pass legislation periodically to increase the nation's debt ceiling. While it does demand regular attention to our debt levels, this method restricts that consideration to very short-term demands. Many fiscal experts have proposed debt targets. Whatever the debt limit, the aim is to choose a target that can accommodate a sustainable fiscal plan. The European Monetary Union has set the goal of 60 percent of GDP as part of the admission requirements for its member countries. That level reflected a view that the 60 percent ceiling would be feasible to achieve and that carrying debts above that level would increases risk to a country's economy. However, by itself, a debt limit would be ineffective. It would depend on a comprehensive and detailed fiscal plan in order to be effective.

Stakeholder(s):

• Congress


• The President

Indicator(s):

Indicator:1

Content