unsustainOble

clipped from www.powerlineblog.com Last week, Congressional Budget Office director Douglas Elmendorf testified before the House Budget Committee. That prompted this exchange: Q. In the report you use the term "unsustainable," a term which a number of people use in terms of the current budget deficit track and a term I've used myself. ... I'm not sure that there is a complete understanding of the consequences of inaction here in this town. We use the term "unsustainable." Can you be a little more specific and describe to us what that -- what happens? We do nothing; we now look at deficits of $500 billion to $1.5 trillion as far as the eye can see; what happens? ELMENDORF: I think a particular thing that's unsustainable is to have federal debt constantly rising as a share of GDP because that requires a larger -- ever-larger share of investors' portfolios to be occupied by treasury securities. And at some point they will refuse to hold them, or will insist on much higher interest rates to do so.