Wilson Quarterly's Douglas J. Besharov and Douglas M. Call describe the critical situation of national deficits in the wake of the financial crisis and provide a "menu" of options to Congress for addressing the projected U.S. debt of $123 trillion in 2050.
Like many other countries, the United States is buried under a pile of mounting debt. Tunneling out will mean making some tough choices that can’t be put off much longer.
News stories regularly remind us that most national governments in the developed world are essentially insolvent. The United States has one of the worst balance sheets, with a projected debt in 2050 of $123 trillion. Of course, what can’t happen won’t happen, as economist Herbert Stein taught us. Long before that point, most countries will get their finances in order—either after a careful analysis of the alternatives or because they will be unable to borrow money and will be forced to take corrective action. How capably they respond will determine their future economic competitiveness and their standard of living.
Those countries that do a better job of bringing revenues and spending into balance—in a way that fosters a healthy and productive citizenry—will have a competitive advantage in the global economy, and they may be able to avoid economic decline.
Whether they know it or not, the developed (and emerging) nations of the world are in a race—not, one hopes, a race to the bottom, but rather a race to develop more economically efficient tax and social welfare policies while maintaining an effective social safety net. As in any race, learning from your competitors can be crucial to doing well. Around the world, countries are trying different approaches to solving the same long-term budgetary problems.