Here is a good article from the New York Times on the national debt and partisan politics. It has some good quotes, including this one:
“I used to think it would take a global financial crisis to get both parties to the table, but we just had one,” said G. William Hoagland, who was a fiscal policy adviser to Senate Republican leaders and a witness to past bipartisan budget summits. “These days I wonder if this country is even governable.”And this one:
“There isn’t a single sitting member of Congress — not one — that doesn’t know exactly where we’re headed,” Mr. Simpson said in a telephone interview Tuesday just before word of his role got out. “And to use the politics of fear and division and hate on each other — we are at a point right now where it doesn’t make a damn whether you’re a Democrat or a Republican if you’ve forgotten you’re an American.”I think two of the biggest potential economic problems facing the country are spending and the debt. These two issues too easily get caught in partisan politics, and hard decisions get put off. The impression is that Democrats want to boost spending and tax the rich, while Republicans want tax cuts. Republicans have further backed themselves into a corner by pledging not to change Medicare.
Not dealing with these two issues in a serious manner will to higher interest rates and eventually weigh on the national credit rating. A drop in the national credit rating will really push up interest rates and the economic consequences of this are hard to imagine.