Do Deficits Matter?

The federal debt keeps rising, like a monster from the sea, and now threatens to take a $ 12,700 bite out of each of us. Many observers blame the deficit beast for—among other things—high real interest rates, an overvalued dollar, and the deterioration in our international accounts, and they warn that it will inevitably gnaw away at our standard of living. With national concern rising, President Clinton has made deficit reduction a focus of his economic policy, and his opposition has found it a convenient topic for political haranguing.