Deficits out the wahzoo!

[mongiovg <mongiovg@xxxxxxxxxxx>]

I'm having a little difficulty getting my brain around yesterday's front-page
Financial Times story about projected US deficits. According to the FT the US
Treasury produced a report earlier this year projecting "chronic federal
budget deficits totalling at least $44,200 billion in current US dollars."  At
first I thought I'd misread the number; then I thought it was a typo; then I
wasn't sure what to think.  The number is obviously a cumulative deficit, but
the FT was murky about when the cumulative total was supposed to hit $44
trillion, except to connect it to retirement & health care costs of baby
boomers. The number, I think, is much larger than conventional estimates,
which suggest that the deficit might hit 10 trillion in about a decade.
Needless to say, the Bushites sat on the report for fear that it mught knock
their tax cut initiative off  track.

So a coupla questions for the group.  First, competent middle-of-the-road
mainstream economist are already having cows over the more conservative
conventional estimate.  Wouldn't the Treasury economists who put the report
together have predicted catastrophic consequences long before the deficit got
to their projected $44 trillion? Second, while most of us on this list agree
that the deficits are not intrinsically bad, and in fact are necessary to
support aggregate demand, there is a question of how large they can get before
they become unsustainable.  Any thoughts on whether the Treasury projection
crosses the threshold? Finally, does anyone know how the sam hill the Treasury
got a number that is so much larger than any previous estimates.  'Splain it
to me, Lucy. Thanks.

Regards,

Gary