Tracy, as I said in my PM to you, I'm sorry my initial reply/edit didn't get my point regarding the government debt across. As I meant to say the first time, I obviously don't think endlessly adding debt is a sustainable fiscal strategy. But where I seem to differ from some of the Tea Partiers is that I also don't think defaulting on the debt is a viable option.
Some people make a point that tax receipts are enough to cover the interest payments on the debt. That, in and of itself, may be true. But the reason we run deficits every month is because our non-discretionary spending exceeds tax receipts. So yes, we may be able to pay the interest on the debt without defaulting based purely on tax receipts...We can't meet our obligations based entirely on tax receipts. Want to hurt the economy? Try not paying seniors their social security checks for a few months.
Unfortunately, the policies that are likely to rectify the debt situation (cutting spending and raising taxes) are also the same policies that are likely to stifle growth and potentially lead us back into a recession. History bares this fact out. In an ideal world, we'd be able to grow our way out of the debt...And some Republican plans (Pawlenty) insinuate that spending $11.6 trillion on tax cuts for the wealthy will somehow stimulate GDP growth on par with China's GDP growth. Pretty much every economist admits that this notion is absurd. Similarly, the idea that you finance your way out of debt by adding more debt (without addressing structural problems) is not sustainable.
We really need austerity...But the time for harsh austerity isn't now. There needs to be a plan whereby which austerity will be phased in so that we don't choke our economic recovery. And in my opinion, austerity measures need to leave EVERYTHING on the table...Tax increases, spending cuts, entitlement reform, etc. And quite frankly, I think none of our current crop of politicians have the political wherewithal to stand up and do what needs to be done. To be sure...They are one-sided in their approach. Republicans will talk about privatizing Medicare but don't want to touch taxes. Democrats will talk about raising taxes but don't want to touch entitlements. In the end, I'm sure that we'll end up with a bland compromise that is underwhelming...And which ultimately does very little to address our larger issues.
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