The state of Utah’s bonding practices vary dramatically from the practices of the federal government. An analysis by the Kem C. Gardner Policy Institute shows borrowing in both the U.S. and Utah increased dramatically over several decades in nominal terms. Yet even with those higher nominal debt loads at both levels of government, major differences exist.
“Federal government debt as a percent of the U.S. economy, currently at about 120 percent of gross domestic product (GDP), raises serious questions and is at the center of significant deliberation as Congress debates the federal debt ceiling and various spending cuts,” said Mike Christensen, Gardner Institute scholar-in-residence and lead author of the report. “This accumulated debt results from the combination of crisis-related debt spikes and continuous deficit spending to cover basic annual operating expenses. By contrast, Utah’s debt is used exclusively for capital projects such as roads and buildings, which serve as a valuable investment in the state’s capital stock for future generations.”
Key findings of the Gardner study include the following:
U.S. Government Deficit & Borrowing. The federal government consistently deficit-spends. As of FY2023, the Congressional Budget Office estimates that the federal government will spend $6.2 trillion, compared to $4.8 trillion in revenues. This mismatch results in a $1.4 trillion deficit, which the U.S. Treasury covers by borrowing. The nation’s borrowing spikes in times of national crises such as war, recession or pandemic as the government increases its deficit spending.
Accumulated U.S. Federal Debt. As of May 2023, the accumulated federal debt totaled nearly $31.5 trillion. This includes public debt (debt held by the public) of $24.64 trillion (78 percent) and intragovernmental debt (debt held through intragovernmental transfers) of $6.82 trillion (22 percent). Foreign governments, including Japan and China, hold nearly one-third of the U.S. public debt. Other investors (banks, mutual funds, pension funds, states and local governments, the Federal Reserve, individuals, etc.) hold the remaining two-thirds of the debt held by the public.
Utah’s Fiscal Prudence. Utah’s debt is used exclusively for capital projects such as roads and buildings. Investment in the state’s capital stock serves future generations who also pay for this investment. From 2001 to 2020, the state issued $8.2 billion in bonds for needed capital projects and still maintained its AAA bond rating. This signals that Utah borrows prudently, report authors concluded.
The full report is available online at the Gardner Institute website.