Deficits forever?

So if liberals can’t win, conservatives can’t win, and the two sides can’t strike a deal, how are we actually going to get our fiscal house in order?

I think one all-too-plausible answer is that we aren’t. That might mean a genuine debt crisis, a near-default scenario that forces a combination of spending cuts and tax increases, perhaps with some swift inflation worked in, that’s uglier than any grand bargain either side would countenance. But given the resilience of global confidence in the United States over the last two years, it might just mean living with structural deficits that drag on growth for years and decades to come. Indeed, if I were rank-ordering scenarios for the American future right now, the latter possibility would probably rank highest: Neither a massive crisis nor a sweeping legislative solution, but an ugly equilibrium in which muddling-through politicians win enough small victories and reach enough small deals to gradually stabilize the debt-to-GDP ratio … but at a level that all-but-ensures a generation or more of economic stagnation and lurching, shortsighted, crisis-driven domestic policymaking. …

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Instead, the option of some sort of can-kicking may always be available, and so a broader solution to our fiscal problems will require more from politicians than just defensive maneuvering and an assumption that the public will choose their side when push really comes to shove.

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