When Deficits Become Dangerous

Michael J. Boskin - WSJ.com

Debt-to-GDP ratios over 90% have significant impact on the pace of economic growth.

BY MICHAEL J. BOSKIN

President Barack Obama's 2011 budget lays out a stunningly expensive big-government spending agenda, mostly to be paid for years down the road. He proposes to increase capital gains, dividend, payroll, income and energy taxes. But the enormous deficits and endless accumulation of debt will eventually force growth-inhibiting income tax hikes, a national value-added tax similar to those in Europe, or severe inflation.

On average, in the first three years of the 10-year budget plan, federal spending rises by 4.4% of....