But even under most optimistic scenarios, the US will grow at only ~3% maximum in the foreseeable future. So the US will need to keep its deficit at also ~3% in order to maintain its debt-to-GDP ratio.
For example if the US runs an 8.5% deficit in 2012 and grows at 2.5%, then the remaining 6% will be added the 99.7% debt-to-GDP ratio that America already has. But since the Euro is currently sucking and the RMB is still pegged to the dollar, investors really have no other choice than to buy more US government bonds, allowing the US to delay having to inflate away its debt. But once the Euro is fixed and the RMB is set free, then investors will start dumping the overprinted dollar en masse for new reserve currencies, which would cause massive inflation in the US.
Under the Obama budget the US isn't expected to hit 3% deficit until 2019, and by then it may be too late as the Euro will probably be fixed pretty soon and the RMB freed in 5-10 years. Just look at what happened to the US dollar in the first half of 2008 when the US deficit was too high and the Euro was strong. Imagine that but 3 times as severe if US hasn't fixed its debt problem when the RMB is released.
So the Tea Party, despite consisting of mostly idiots who have zero understanding of economics, is correct in saying that the US monetary system is a ticking time bomb. Although their proposed cuts to short-term gov spending would cause far too much damage to the US economy, Obama's budget in contrast runs a far too large deficit which is just as bad.
The GOP and DEMs really need to find a way to truly compromise here, and not just continue their half-baked odd compromises that no one is happy with, if America wants to prevent its monetary time bomb from exploding.