The Congressional Budget Office shows us below how U.S. long-term debt will stabilise and actually be OK, if the government simply does absolutely nothing.
Matthew Yglesias argues:
See that line where the debt:GDP ratio is stable? That’s what happens under current law. If congress changes nothing, or the president vetoes everything, then this is what happens. No apocalypse. But nobody believes that’s going to happen. Nobody believes the Bush tax cuts will fully expire. Nobody expects the AMT phase-in to happen. Nobody expects physicians’ Medicare reimbursement rates to be held in check. And though I think he’s mistaken about this, Doug Elmendorf is sceptical that some cost-saving elements of the Affordable Care Act will ever be implemented. That’s the “alternative fiscal scenario” in which the debt level skyrockets.
But note that congress doesn’t need to do these things that it’s projected to do under the alternative fiscal scenario. Congress can stick to current law, and we’ll be fine.