Is the Federal debt a problem or not?

From a New York Times Article: Debt Splits the Left

“… James Galbraith, an economist at the University of Texas, contends that the issue of deficit spending has been blown out of proportion by those whose focus on austerity blinds them to the damage inflicted by cuts in Social Security and Medicare. Instead of conducting major surgery on federal spending programs, Galbraith argues that “it is possible to run a low and even modestly negative real interest rate on the public debt at a low rate of inflation, and therefore to sustain quite a large primary deficit, essentially indefinitely and trouble free.”

Galbraith is optimistic about future economic growth and sees no need for spending cuts in Social Security or Medicare. “Let the economy recover through time, and do not worry if the debt-to-GDP ratio rises for a while,” he advises.
Jared Bernstein, former chief economist and economic adviser to Vice President Joe Biden and now a senior fellow at the Center on Budget and Policy Priorities, argues that many politicians are using public anxiety over the deficit to justify ideological attacks on government:

We should not lose sight of the political and ideological motivation against deficit spending. In an era when tax hikes are verboten, deficit reduction can be achieved only through spending cuts, and it has thus become a way of arguing for less government.

Bernstein rejects the argument that the deficit has ballooned largely because of domestic social spending. He contends instead that the major factors pushing up the deficit were the Bush tax cuts enacted in 2001 and 2003, at a cost of $3.6 trillion over 10 years and the wars in Iraq and Afghanistan…

Who is right and who is wrong about the deficit?  You can find a noted economist to say it is a problem to be dealt with and you can find one essentially saying it’s nothing to be concerned about. One of them is wrong.

The real problem for the American people is deciding which is which. On the left is the overwhelming urge to preserve and expand entitlements in all forms. On the right the goal is smaller government and lower or at least not higher taxes. It seems to me the critical question is where will these policies lead us in the long-term?

Sooner or later something has to give. We will be a high tax, high entitlement country with 50% of citizens paying taxes and the other 50% collecting benefits or we will be a dynamic country with everyone pulling his weight and benefiting from a growing economy proportional to his efforts; classic ant and grasshopper stuff.

Is it a big deal we are a debtor nation paying for our social goals by borrowing money from other nations concerned more with their status in the world order than with their own citizens?  I don’t know, but I do know it bothers me greatly that the United States goes hat in hand to the rest of the world and that sooner or later beholden to others will likely affect policy decisions.

It also bothers me greatly when I read things like … “major factors pushing up the deficit were the Bush tax cuts enacted in 2001 and 2003”.  Is the answer simply unlimited spending followed by unlimited tax increases?  

Isn’t the real issue why Congress [both Democratic and Republican controlled] failed to match spending and available revenue?  Who grew the deficit,who cares? What is the point in answering that question except for political gain?  In any case the answer is easy; Congress did.

We are like little children stamping our feet in a rage over what we can’t have. In this case it is our Uncle saying, “I can’t stand it, just give them what they want, here is my credit card.”

Related articles

• Campaign Stops: Debt Splits the Left (campaignstops.blogs.nytimes.com)