Blind Men and Elephants in the Room: How Much Should We Worry about the Public Debt?

President Obama is expected to announce today a $3.8 trillion budget with a $1.2 trillion deficit for FY2011. Here’s the context within which he will reveal his plan. For decades now, the federal debt acquired through years and years of deficit spending has been the “elephant in the room” – the huge presence nobody talks about but everyone knows is there. In last week’s State of the Union address, however, debt joined unemployment as the two most urgent issues facing America as Obama enters his second year as our President.

Last year, the White House and Congress went “Keynesian” in a big way as the real-estate bubble popped and ...