Is the U.S. deficit a big deal?

What do you think? It is the growing of the budget deficit a big deal for the U.S.? Will it drive the standard of living down? Or it is just a temporary condition from which the U.S. will escape with a new fast growth?

I have my own oppinion, of course, but I would like to know what Americans think about it.

Ive heard two different thoughts on this.

#1 No, the US will either inflate the deficit away, or the economy will grow a lot and the deficit will be of little consequence.

#2 Yes, to quote them “Sending $300 billion to China year after year will cost us an estimated one million jobs a year until we figure this out”

Inflating away the debt is pretty much a worst-case scenario. We’ll end up with one of those worthless Third-World currencies where it takes $5000 to buy a loaf of bread, and a car is tens of millions of dollars. Only the very wealthiest of Americans could afford to travel abroad, and US citizens would become cheap labor for companies from wealthier countries.

Since the OP is seeking opinions, this is better suited to IMHO than GQ. However, given the political ramifications, it may eventually end up in GD.

General Questions Moderator

IMO? It’s a serious problem, but not a catastrophe in the short term. I believe that we can keep going without any major reforms for maybe another decade, but at that point we’ll be forced into the sort of austerity programs that Europe is seeing now, with big cuts and major tax hikes all around. We’d be better off tackling things now, with modest cuts and modest tax hikes. My views are more on the liberal side, so I’d like to see less cutting and more tax increases. But frankly I’d be thrilled with any serious attempt. Obama’s long-term budget proposal is a step in the right direction but doesn’t do enough. Same with the current Republican plan, and additionally it does some radical privitization without any tax increases. Honestly I’d be thrilled if the Simpson-Bowles recommendations were enacted without any changes at all.

ETA: When I say modest cuts, I mean modest cuts to the big parts of the budget that actually matter: entitlements and defense. The last round of discussion for this year’s budget has just been about modest cuts to a tiny part of the budget.

For many many years, the U.S.A. has prided itself on being unique. Uniquely rich, uniquely powerful, uniquely smart, uniquely well-governed, and with the unique Almighty Dollar as our currency. These dreams are fading but the great shattering of these delusions hasn’t yet come. By now, however, I’m afraid I expect to see that shattering sooner rather than later.

The U.S.A. has several severe problems other developed countries do not: Racial and class divisions, now exacerbated by severe income inequality which is worsening rapidly; over-reliance on fossil fuels; crumbling infrastructure; expensive mis-allocated health care without universal coverage; expensive military; dysfunctional political system; poor news media choices; widespread disrespect for science and government. Several of these problems arise from the great power we’ve given to the super-rich. (I was amazed by the title of a recent SDMB thread “What would a U.S.A. plutocracy look like?” I never bothered to click, because the answer was obvious: You’re already looking at it.)

It may be the nature of such problems that crisis manifests itself most clearly in finance. Yet the shattering of Wall Street’s delusions in 2008 was ignored: Wall St. was in effect asked to keep doing more of the same. :smack:

The dollar already has lost much value, and will lose much more. (The Euro has doubled against the dollar over the past decade or so, despite Europe’s own problems.) U.S. Treasury debt, once proudly called the safest investment in the world, has been put on notice of downgrade.

Yes, the U.S. deficit is a big deal. A very big deal.

The problems are not insolvable. But will “hard choices” be made?

Republican proposals call for a big reduction in income taxes on all but the poorest Americans, elimination of capital gains and estate taxes, and reduction of corporate taxes. If the problem were budget surplus then these ideas might have merit.

Instead we’re reaching a point where rationalists will stop pulling their hair out and pleading for sanity, and just treat the U.S.A. as farcical entertainment.

Sorry if this is little help.