There is theory that debt drives GDP. The more debt, the more money in circulation, more GDP.
So cutting debt, cuts GDP.
Also. Not sure GDP is completely normalized verses inflation.
So cutting debt, cuts GDP.
Also. Not sure GDP is completely normalized verses inflation.
Other way around.
Debt comes from spending, that spending is on stuff, which drives GDP.
So whole concept that we could reduce debt by increasing GDP and tax it, is not how the money actually flows.
This is why in economic downturns, often the best solution is more debt, by more spending. And trying to fix economy by 'austerity' makes things worse.
Of course, also I don't know solution, or what the 'right size' debt should be. Just that it isn't black/white.