Economists have debated the effects of deficit-financed spending on short-run aggregate demand, the price level, long-run growth, and economic welfare since the classical economists. While debate continues, a quasi-consensus— call it the traditional view (TV)—has emerged. Recently, it has been sharply questioned on analytical and empirical grounds. I describe the TV's conclusions, evidence of a looming debt problem, policies necessary to contain it, and recent empirical research on effects of deficits and debt; Blanchard's (2019) objections to the TV and his conclusion of no fiscal cost or welfare loss to debt increases; and my analytical, empirical, and political economy critiques of his analysis.
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