Joel Achenbach writing in the Washington Post:
It's a tough task. The short term looks awful, and the long term looks hideous. Under any likely scenario, the federal debt will continue to balloon in the years to come. The Congressional Budget Office expects it to reach $20 trillion over the next decade -- and that assumes no new recessions, no new wars and no new financial crises. In the doomsday scenario, foreign investors get spooked and demand higher interest rates to continue bankrolling American profligacy. As rates shoot up, the United States has to borrow more and more simply to pay the interest on its debt, and soon the economy is in a downward spiral.
Of course, at least in theory, this problem can be fixed. Unlike a real Ponzi scheme, which collapses when no new suckers offer money that can be used to pay off earlier investors, the government can restore fiscal sanity whenever our leaders decide to do so.
But that premise is what has people like Gross worried. In addition to running a budget deficit, Washington for years has had a massive deficit of political will.
Over the past decade, lawmakers have avoided the kind of unpopular decisions -- tax increases, spending cuts or some combination -- needed to keep the debt under control. Federal Reserve Chairman Ben Bernanke testified recently that, for investors, the underlying problem with the debt isn't economic. "At some point, the markets will make a judgment about, really, not our economic capacity but our political ability, our political will, to achieve longer-term sustainability," he said.
As long as the Democrats own Congress, there isn't much hope they will make the kind of tough choices Achenbach and Bernanke are talking about. The spending is out of control because if the Dems tried to rein it in, it would anger their numerous allies in labor and government. They would be sealing their own death warrant anyway even if the rest of the country wasn't hopping mad about the spending.
Damned if they do and damned if they don't, the Democrats will keep spending until someone takes their printing press away. Let's hope that happens this November.
Update: Michael Geer reminds us of the online US Debt Clock, which provides the Awful Truth about the hole we are digging.