To be clear, it’s perfectly feasible for an economy with the strong credit rating of the United States to sustain massive short-term deficits, because the expectation is that the government will be able to pay back investors over time. This was the case during World War II, when deficits exploded, only to recede in the decades that followed.
What’s different now is that that the federal debt is not only at historically elevated levels, but it is expected to continue to pile up.
In 2014, the cumulative debt held by the public is expected to exceed 74 percent of the nation’s economic output. According to the White House Office of Management and Budget, that is more than double where it was in 2007, before the financial crisis hit, and the highest level since 1950, just after World War II.
In a report released in July, CBO projected that government debt would continue to grow, and within 22 years would equal the size of a year’s economic output.