Does Democracy Demand More Public Debt?

Sovereign debt history of empires, city-states, early republics & parliaments, and, then, democracies.

Graph by CBO. The amount of U.S. public debt, measured as a percentage of GDP, held by the public since 1900.

On August 1, Fitch Ratings downgraded America’s credit ratings from AAA to AA+.

Click here for my podcast on the history of national debts, from the Roman Empire to our growing national debt.

What this means, in effect, is that we are no longer in the super-elite club of national borrowers. What this means is that Germany, Luxembourg, Netherlands, Sweden, Switzerland and Denmark, now have a better credit rating than the United States of America.

You can find hundreds of articles and analyses criticizing Fitch Ratings’ downgrade. Frankly, the timing was off. America’s economy and our ability to service our national debt is on a surer footing than it was back in 2011. If you recall, in 2011 Congress and the White House got themselves into another debt-ceiling standoff. Although disaster was averted then, Standard and Poor’s downgraded the U.S. government’s credit rating one notch below the top grade. (See WSJ, 8/1/23)

So why downgrade now? Fitch’s stated reason for this month’s downgrade is “erosion of governance” in the U.S.