Niall Ferguson on the Debt Bomb
12:27 PM, Nov 30, 2009 • By MATTHEW CONTINETTI
Schedule some time today to read Niall Ferguson's Newsweek essay on the coming fiscal crisis. Here's a sample:
Ferguson's long-term outlook? He says the most likely scenario is that debt-service will make up a large and growing portion of the federal budget in the decades to come, crowding out spending on national defense. And as military spending declines, so will America's capacity to provide the global public good of international security. America's economic and strategic position will be weakened. Better dust off that Mandarin phrase book.
When you're in budgetary pickle like this, the only proper response is to grow your way out. That's how America recovered from its post-World War II debt burden, when the public debt was 113 percent of GDP. The problem today is that the Obama administration's tax-spend-and-regulate economic policies could hamper robust growth. So the debt bomb keeps on ticking.