The US is about to discover if deficits don't matter

It's hard to think intelligently about public debt and deficits. The economics of fiscal policy is complicated and defies straightforward prescriptions. What's most striking about budget-making in Washington today, though, is not that legislators are confused about what good debt-management requires. It’s that they've just stopped thinking about it.

- Clive Crook, Tribune News Service

In 2002, Vice President Dick Cheney famously said deficits don’t matter, noting that the national debt soared during Ronald Reagan’s time in office (from 21% of GDP to 35%) as the economy boomed. Conscientious fiscal neglect, as one might call it, is nothing new. The difference is that Cheney's comment was provocative and meant to be: It drew attention and was argued over. Not any longer. Nobody in Congress or the White House thinks it necessary to insist that deficits don’t matter. They've simply stopped caring. This suspension of fiscal anxiety might seem puzzling. Perhaps the public debt is now so big, and on such a fast-rising trajectory, that bringing it back under control seems impossibly difficult. A politician might therefore ask, why worry about it? Without this bill, debt was already on track to exceed 150% of gross domestic product by 2055. But there's no politically feasible way to rein it in. So why not cut taxes by another few trillion dollars over the next 10 years? Sure, this will raise the debt by another IO percentage points, but the debt was “unsustainable” anyway, so what's your point?