How important is lowering the national debt?

How much should we worry about the long-term budget outlook? Is a focus on deficit reduction just “old-style thinking” that does not fit the current economic outlook, or should it continue to be an important policy goal? In particular, what are the implications of the extremely low level of long-term interest rates for optimal debt policy? What should policymakers do to address the recent run-up in our nation’s debt and the budgetary challenges of an aging population?

On February 5, the Hutchins Center on Fiscal and Monetary Policy at Brookings released a paper by Louise Sheiner and Douglas Elmendorf that aims to shed light on these questions. Olivier Blanchard of the Peterson Institute for International Economics and University of California-Berkeley’s Alan Auerbach responded and joined the authors, and Hutchins Center director David Wessel, for a discussion.