Running head: GOVERNMENT: DEBT FINANCING AND EDUCATION
Government: Debt Financing and Education
GOVERNMENT: DEBT FINANCING AND EDUCATION
In what sense does the use of debt financing by a national government impose a burden on
the future generation? How does debt financing increase the "wealth" of the current
generation compared with tax financing? Under what circumstances will the weight of the
debt on future generations be offset?
A few economists argue that the use of debt financing by a national government will
impose a burden on the future generation. They claim that the weight of the debt references to
the challenges that come up when the debt is to be repaid. They suggest that the burden shifts
from the current generation to the future age when the government rents. When the loans are
paid at a later date, it will have accumulated in interest, and the next generation has to suffer
because of being imposed to repay these debts. Therefore, this future generation will have to put
up with a depletion in their living standards because of the high taxes they will have to pay
(Rosen, 2014). The debt financing raises the wealth of the present generation as it increasing
monetary value from the public as well as some other institutes which are later going to be paid
by the future tax returns. With debt financing, the current generation will only pass the burden to
the future generation after they have enjoyed spending the funds and the taxes imposed on the
later generation. The government spends more with the debt financing strategy, whereas the
citizens are subjected to a lower purchasing power since their earnings go down as the tax
payment increases. The...
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