Deficits Matter

Last week, in an interview with Ezra Klein, James Galbraith argued that US deficit poses "zero" risk. Len Burman counters:

Taken to its illogical extreme, Galbraith’s argument implies that there is no limit to government’s borrowing capacity (and that the money never really has to be paid back).  If that’s the case, why not dispense with the annoyance of taxes altogether?

...Galbraith thinks deficit hawks are all anti-government kooks who want to dismantle the social safety net.  In reality, Galbraith and his fellow Cheneyites are the greater threat to vulnerable populations.  If we accumulate debt until it reaches catastrophic levels, the consequence would be a necessary sudden and drastic cut in government spending (see Greece and Iceland for examples of what happens to spending after a debt crisis) as well as an economic meltdown that could impoverish a generation (see Argentina).