No week goes by without an email from Murkey Matrus, a successful Hoosier entrepreneur, now in retirement. Lately the themes have been consistent with the national debate consuming the presidential and congressional elections.
Murkey writes: The national debt is too high. We must cut it down to a more reasonable level.
I reply: How do you know the national debt is too high? Is there a magic ratio of debt to something? For a family, is there a magic ratio of debt to income? Some families cannot handle a debt equal to 5 percent of their annual income while others have no difficulties with a debt that exceeds annual income. It all depends on the repayment terms, the interest rate and the annual income and expenditures of the family. What would be the “right” amount of national debt?
Murkey responds: Less debt would be better, and the way to get it is to have a balanced budget where federal taxes equal federal outlays.