No, but let's not lose sight of what's important. The deficit itself isn't very relevant...even the dollar amount of the national debt isn't too important. What's really important is the debt-to-GDP ratio
I think you are forgetting the snowballing effect of interest - continuously going deeper into debt will cause you later to go increasingly deeper into debt. And Interest competes with our entitlements as the major driver of our unsustainable debt:
THAT is what can cause us economic headaches if it gets too high.
truth; which is why the Presidents' 2012 budget would have been a pathetic joke if it wasn't so serious. Once you have debt high enough to consistently drag your growth below 3%, it becomes incredibly hard to avoid a spiral.
So it's possible to consistently run deficits and still reduce the debt-to-GDP ratio, as long as the economy is growing faster than the debt. This was more or less the situation that prevailed for 35 years following WWII.
What I'd like to see is balanced budgets (or surpluses) during boom times, and deficit spending during recessions. Ideally, we shouldn't have a deficit of more than about 1% over the course of the business cycle IMO.
there again we are going to disagree; but that is a different debate.
Do you have an example of this? It was my understanding that threatening default to extract concessions and/or embarrass the opposition only dates back to the period AFTER the debt-to-GDP ratio started rising again.
A sanctimonious president refuses lawmakers the cuts they demand. The federalists in Congress grow cocky. They'd rather force a bond-market crisis than raise the debt ceiling or erode states' rights.
“I'm not worrying,” the firebrand Virginian leading the opposition to the president says, and charts his own version of the budget. “I'm sticking to my guns. We've got a prairie fire started among the people in favor of cutting the budget.” The president disapproves. The Virginian is downright gleeful. The debt-ceiling fight is giving new life to his already lengthy career.
This sounds like the story of the very Democratic President Barack Obama and the very Republican House Majority leader Eric Cantor battling in 2011. But it's actually a description of the very Republican President Dwight D. Eisenhower and the very Democratic finance committee chairman, Harry F. Byrd, in 1957. The details of that quarrel are worth remembering, if only to remind us that the meaning and impact of such contests may be different from what politicians, or the public, assume at the time...
Ike determined that the government must raise the debt limit to $290 billion from $275 billion before he could finish his budgetary cleanup.
“Despite our joint vigorous efforts to reduce expenditures,” Eisenhower told lawmakers, “it is inevitable that the public debt will undergo some further increase.”
His second-in-command, Treasury Secretary George Humphrey, played the heavy. If the debt-ceiling increase didn't become law, “it would just cause a near panic,” Humphrey said. Daunting words to children of the Depression. The Dow Jones Industrial Average was only then, after a quarter century, returning to its 1929 level. A panic would jeopardize the last stage of that long- awaited stock recovery.
But legislators were more alarmed about debt. War spending was becoming forever spending. U.S. debt as a share of the economy was declining, and was lower than it is today, but was still nowhere near as low as in the 1920s or 1930s. The rebels charged that Eisenhower was trying to turn debt levels higher than the New Deal into a new normal...
Harry Byrd marshalled opposition to Eisenhower's request. The government could scrape by without additional borrowing authority, he insisted. The Treasury had some $9 billion in ready cash. The president had the power to curtail federal expenditures and create even more wiggle room.
For a while, Byrd prevailed. The apocalypse didn't materialize. The government made it through the first half of the next year using a mixture of ready cash, spending reductions and various financial manoeuvres.
In August 1954, the Senate finally agreed to raise the limit by $6 billion, but only temporarily. That fall, the Dow finally crossed its 1929 high of 381.
Still, Byrd tangled with Eisenhower all decade. In 1957, Eisenhower proposed a $72 billion budget; Byrd countered with a “Byrd Budget” that would cut federal spending by $6.5 billion. And so on. The debt ceiling stayed below $290 billion, Ike's original goal, until 1959. Meanwhile, the economy gained ground, which eased the debt burden....