On the other hand, maybe it’s still true that there is no free lunch, and that there are risks in our present course, including but not limited to a possible spike in interest rates, plus the long-term costs to future generations. The United States will enter its next crisis, foreign or domestic, with much of its capacity to borrow already taken up by preexisting priorities. That is, the United States is borrowing at a pace previously seen only during major wars and recessions — yet it is generally at peace, with full employment.
A wise government hedges against the risks of debt accumulation, not necessarily by slashing deficits in the short run, but by sticking to a long-term fiscal trajectory that includes plenty of margin for error. We were not quite on such a path as of January 2017, though the annual deficit had fallen by about two-thirds under President Barack Obama. And then the Trump administration and a Republican-led Congress took office. Now we’re seriously off track, due in large part to tax cuts skewed heavily in favor of the wealthy and businesses that were enacted under President Trump — for the sake of what has turned out to be only a modest short-term boost to economic growth. Spending, driven overwhelmingly by programs such as Medicare and Social Security for the growing retiree population, will increase by 2.4 percent of GDP by 2030, according to CBO, while revenue will rise just 1.6 percent; you do the math. Remember, this is a structural deficit, enacted into law, not forced by a recessionary plunge in revenue and surge in unemployment spending. And that’s assuming major parts of the 2017 tax cut expire in 2026 as scheduled; in the more politically realistic scenario where Congress extends them, the gap between spending and revenue would be even wider.