Slow growth and inflation have a tendency to accompany large deficits and increasing debt as a percentage of GDP.
Sentiment: NEGATIVE
When gross public debt exceeds 90 percent of GDP, economic growth tends to decline considerably.
Good debt growth is when you borrow money, and it goes into the real economy. You do capital spending. You build businesses.
When the economy is growing, there's a lot that can be done to deal with the deficit.
The best way to deal with the deficit is through economic growth.
The debt and the deficit is just getting out of control, and the administration is still pumping through billions upon trillions of new spending. That does not grow the economy.
One of the reasons the deficit got as big as it did, frankly, was because of the economic slowdown, the fall-off in deficits, the terrorist attacks. A significant chunk was taken out of the economy by what happened after the attacks of 9/11.
Well, a deficit reflects an imbalance between spending and revenue, and so narrowing it requires acting on one, the other or both.
The massive debt we have racked up to finance our wasteful government is pulling down growth today. Gross debt over 90 percent of GDP weakens growth now. Not tomorrow - now.
As anyone who lived through the 1990s knows, nothing shrinks our deficits faster than a growing economy.
Traditionally, the way deficits have been cut is you hold expenditures more or less constant in real dollars and then let growth come in to fill it up.