> $700 billion is 5% of GDP. Federal debt is now around 38% of GDP.
> It was almost 50% in 1994, and over 60% in 1952. We can afford it.
In 1952 (after WW2) and 1994 (after the fall of the Soviet Union), the expectations about U.S. power in the world were different. The sky was the limit. There's a bigger discount rate on the U.S. nowadays. Don't get me wrong, the U.S. is still a formidable power and with a serious political reform (even within the framework of capitalism), it could bounce back big time. But, for the time being, people abroad are looking at the U.S. very differently. Global power has a bit of a Ponzi quality to it. It's self-reinforcing, until it unravels.