The problem of the burgeoning government debt is mainly political, but the adverse consequences may be economic. The trouble is that we don't know what those consequences may be, when they may occur or even whether they will occur. Without some impending calamity, politicians of both parties recoil from doing anything unpopular that might bring the budget into balance over, say, the next six or seven years. The idea of anticipating and preempting future problems is not on their agenda.
Although the recent surge of budget deficits—the annual gaps between outlays and revenue, resulting in more federal debt—reflects the savage recession, the true cause is political. Deficits allow liberals and conservatives to maintain self-serving public positions. Liberals claim we can have more government (more health care, more education, more transportation) without taxing anyone but "the rich." Conservatives promise that taxes can be cut without depriving anyone (retirees, veterans, cities and states) of existing government benefits.
Neither claim is remotely believable under the assumption that, over the long run, government benefits and programs ought to be paid for with taxes. The truth is that government, again under both parties, has promised far more in benefits than can be covered by existing taxes. Only borrowing could reconcile the rhetorical claims with underlying economic realities. There have been 43 deficits in the past 48 years.
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