A couple of days ago, I noted the normally equable Brad DeLong saying that the US was on the path to national bankruptcy. Here’s some similar observations from
Paul Krugman

If the administration gets what it wants, within a decade — or perhaps sooner — the United States will have budget fundamentals comparable to Brazil’s a year ago. The ratios of debt and deficits to G.D.P. won’t be all that high by historical standards, but the bond market will look ahead and see that things don’t add up: the rich have been promised low tax rates, middle-class baby boomers have been promised pensions and medical care, and the government can’t meet all those promises while paying interest on its debt. Fears that the government will solve its problem by inflating away its debt will drive up interest rates, worsening the deficit, and things will spiral out of control.

Ho hum, you may say, Krugman never has a good word for the Bushies. But Hal Varian is as moderate and reasonable as they come, and his piece starts

ALAN GREENSPAN, the Federal Reserve chairman, called the latest forecasts of budget deficits “sobering.” A better word might be “shocking.”

and ends

What will happen if nothing is done? If deficits continue to accumulate, the temptation to print money to pay our debts will become almost irresistible. Inflation is all too tempting as an “easy” way to avoid the political pain associated with tax increases or budget cuts.

All a president needs is a pliable Federal Reserve Board, and this can probably be arranged sometime in the next 10 or 15 years. Inflating away the debt is not pretty, but it may well end up being the most politically expedient solution to the burden of accumulated deficits.

Varian in turn quotes work by Auerbach, Gale, Orszag, Potter, highly respected economists associated with the Brookings Foundation (Democratic-leaning but centrist rather than left-liberal). Analysing projections from August 2002 (that is, without either an Iraq war or the latest Bush budget) they estimate a 10-year deficit of $5 trillion averaging about 4 per cent of GDP. The 2003 Budget and Iraq imply another $300 to $400 billion in annual deficits (3 to 4 per cent of GDP), suggesting a budget deficit well in excess of the 5 per cent rate generally regarded as signalling a descent into unsustainability.