When Will The Debt Bubble Pop?

Jim Manzi weighs in on the national debt. An essential truth:

The long-term forecasts … illustrate the crucial point that we are sitting on the mother of all bubbles. Many, probably most, Americans anticipate a stream of consumption that will be provided for them into old age by the government (i.e., other taxpayers). Unfortunately, most American taxpayers do not anticipate the kind of enormous increase in taxes that would be required to pay for this stream of benefits. One or both of these expectations will not be met. Americans as a whole are simply less wealthy, in the most useful sense of rationally anticipatable future material consumption, than they think they are. And the size of this disconnect is vastly greater than, for example, the size of the housing price bubble that just popped.

Manzi argues that a real plan to address the debt "should focus on two key elements: (1) putting in place mechanisms for influencing future legislatures that we cannot command, and (2) enacting structural reforms that will simultaneously encourage general economic growth as they do this." This means, to start with:

The goal of the policymaker who wants to deflate the bubble is to make it much harder to do this than simply by passing a budget with X instead of Y dollars for some purpose. Paul Ryan is a skilled budget technician, and seems to me to have prioritized a number of features that will help to serve this purpose. This is the boring, nerdy-sounding stuff like “Create a budget point of order against legislation that would increase net mandatory spending beyond the ten-year window of the budget resolution,” and “Close the loophole that allows discretionary limits to be circumvented through advance appropriations” that form much of the guts of the plan.

These procedural impediments to spending increases seem to me to have been overlooked. Equally, tax reform as both a pro-growth item and a revenue-raising one is a two-fer of critical importance. And this is, to my mind, why the Ryan plan is in the end a disappointment. Without any plan to raise revenues, it fails both core criteria of a shared sacrifice, and engages in the kind of wishful supply-side thinking that has been disproven by the last decade.