We may have more room than other economies around the globe, but I do not intend to project any sense of complacency around this topic. The authors’ basic message seems just right to me: We don’t know where the tipping point is; wherever it is, we are clearly getting closer to it, and the costs of misestimating its location are enormous and one-sided.
The benefits to long-term fiscal consolidation – conducted at the right pace, and without jeopardizing the near-term economic recovery – would be substantial.