The financial crisis and the ensuing Great Recession created unprecedented federal budget deficits in recent years. In fact, these events, combined with subsequent slow growth and two continuing unfunded wars, have resulted in a national debt that is out of control by all meaningful measures. This paper examines the current economic and political dynamics of the malaise.
Particular focus centers on two seminal events that at long last compelled serious consideration of the federal deficit and debt problem: the debt ceiling debate, and the subsequent Standard & Poor’s credit downgrade of U.S. Treasury securities. These catalysts shifted attention from failed monetary and Keynesian stimulus to spending and tax abatement as the means of achieving the long-term economic growth necessary to create jobs and restore prosperity, and thereby reduce borrowing and pay down debt [...]