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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 GDP and up from $585 billion in 2016. As a result of the con- tinuing shortfall, over the next decade, the national debt-the total amount owed by the U.S. government-is projected to balloon from its current level of 78 percent of GDP to 105 percent of GDP. 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 FOREIGN AFFAIRS

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