For many years, respected macroeconomists scolded countries that failed to reduce their debt levels. The International Monetary Fund, whose job it is to lend money to poor countries in crisis, long demanded fiscal austerity in exchange for aid. In Japan, economists darkly warned of a solvency crisis as that country’s debt climbed. In the U.S., too, many economists cautioned that the government was borrowing too much.
Politicians sometimes heeded their words. Both President Ronald Reagan and his successor George H.W. Bush raised taxes to curb deficits, Bill Clinton pushed the government into surplus, and Barack Obama acceded to steep deficit cuts in 2011. As a result, the U.S. federal government’s ratio of debt-to-gross domestic product, though it has increased, isn't on an explosive upward path: