High national debt will cause a generational depression

These estimates of the economic growth effect of the rapid increase in the debt since President Obama assumed office, plus the Administration’s projection of debt based on its policies continuing, are alarming, absent greater productivity growth and health cost containment than seems warranted by its policies. Of course, President Obama’s successors could continue the do nothing on entitlements policy—at least until forced to do something by a crisis—or reverse course, as could Mr. Obama if he is re-elected and so chooses. If the Obama Administration policies (including the absence of Social Security and Medicare reform) were eventually reversed, and the debt-GDP ratio stabilized at a lower level than those in Table 1 or, better yet, gradually decreased, the harmful effects would be correspondingly attenuated, as the “debt stabilized at 2016 level” case developed above indicated. While substantial long-run damage would already have occurred, the economic “gain” from the political “pain” of seriously reforming entitlement cost growth is enormous. Failing to rapidly begin bending the long-run debt-GDP curve down risks a growth disaster, whose severity could be much worse even than the recent deep recession and tragically anemic recovery. Left unchecked, it eventually risks a lost generation of growth, a long-run growth depression.
Source: http://siepr.stanford.edu/?q=/system/files/shared/pubs/papers/briefs/pb_11_2012.pdf