$40 Trillion National Debt Solution

A new study by the Committee for a Responsible Federal Budget suggests that tackling the $40 trillion national debt could alleviate the affordability crisis in the US. The report finds that reducing the deficit would not only aid the interest-rate-setting Federal Reserve in its inflation battle but also boost household income.

The committee estimates that a 1.5 percentage point rate reduction would save a family $5,800 per year on a $500,000 mortgage and $500 per year on a $50,000 car loan. Moreover, the report suggests that fiscal discipline could reduce excess demand and slow price growth, which is currently at 3.4%, well above its 2% target.

The study also crunched the numbers on the savings per household if inflation, and hence, interest rates, came down. According to the Committee for a Responsible Federal Budget, stabilizing the debt-to-GDP ratio would boost real per-person income growth by 10% over the next three decades and more than 44% compared to a high-debt scenario.