344% of GDP

Our friend, Niall Ferguson, who wrote an excellent book, The Ascent of Money, has this article on our deficit. Therein some clear points are made:

"Keynes was a believer in government deficits as a short-term expedient to combat depression. But even he would have regarded America’s current fiscal trajectory as disastrous. According to the Congressional Budget Office’s alternative fiscal scenario—which it sees as politically more likely than its baseline scenario—the federal debt could hit 344 percent of GDP by 2050. Interest payments would absorb nearly all federal tax revenues."

As to proposed resolutions:

"The first possibility is the one devised by Rep. Paul Ryan, which would eliminate the deficit largely through deep spending cuts and Medicare reform. Possibility two is President Obama’s bid to close the budget gap with more modest cuts and tax hikes on “millionaires and billionaires.” It’s a bracingly binary choice. Shrink the government. Or squeeze the rich."