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98 Foreign Aff. 82 (2019)
Who's Afraid of Budget Deficits: How Washington Should End Its Debt Obsession

handle is hein.journals/fora98 and id is 308 raw text is: 





Who's Afraid of

Budget Deficits?


How Washington Should End Its
Debt Obsession

Jason   Furman and Lawrence H. Summers

The United States annual budget deficit is set to reach

        nearly $1 trillion this year, more than four percent of GoP
        and up from  $585 billion in 2016. As a result of the con-
 tinning shortfall, over the next decade, the national debt- the total
 amount owed by the U.  government-is  projected to balloon from
 its current level of 78 ercent of _,i to 105 percent of GoP. Such
 huge amounts  of debt are unprecedented  for the United States
 during a time of economic prosperity.
   Does  it matter? To some economists and policymakers, the trend
 spells disaster, dragging down economic growth and potentially
 leading to a full--blown debt crisis before too long. These deficit
 fundamentalists see the failure of the Simpson-Bowles plan (a 2010
 proposal to sharply cut deficits) as a major missed opportunity and
 argue that policymakers should make tackling the national debt a
 top priority. On the other side, deficit dismissers say the United
 States can ignore fiscal constraints entirely given low interest rates
 (which make borrowing cheap), the eagerness of investors in global
 capital markets to buy U.S. debt (which makes borrowing easy),
 and the absence of high inflation (which means the Federal Reserve
 can keep interest rates low).
 JASON FURMAN is Professor of the Practice of Economic Policy at the Harvard Kennedy
 School of Government, He served as Chair of the White House Council of Economic
 Advisers from 2013 to 2017.
 LAWRENCE H. SUMMERS is President Emeritus and Charles W. Eliot University Profes-
 sor of Economics at Harvard University- He served as U.S. Secretary of the Treasury from
 1999 to 2001 and Director of the National Economic Council from 2009 to 2010.


82   rOREION   ArFAIRS

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