[snowsislander]

Trade deficits are great!!!

Hmmm. I can see where an occasional small deficit is harmless; however, large, prolonged trade deficits look something like this:

Paying the interest, especially as interest rates rise, requires an increasing portion of the pie.

[Jaysun]

That's not a problem because GDP, debt, tax receipts, and interest payments have grown together, in tandem. In fact, tax revenues have more than doubled since 1988. Per capita income has nearly doubled since 1988, while total interest on national debt has grown by about 50% during that same time period.

We're wealthier than we'd otherwise be and the increased tax revenues more than cover the increased interest on the debt. Also, American citizens or agencies of the US government own most of the debt. We're just paying interest to ourselves.

I look at it in the same way that I look at my real estate business. My debt and interest on that debt have increased over the years (to scary proportions some might say) but so has my wealth and income from those investments. As long as my income stays ahead of my debt and interest I'm creating wealth. My interest payments may grow to consume a larger piece of the pie, but I prefer that situation to not having pie at all. ;o)

(income figures) http://www.census.gov/hhes/income/histinc/p01ar.html
(interest figures) http://www.publicdebt.treas.gov/opd/opdint.htm
(tax revenues) http://www.irs.gov/pub/irs-soi/04tc18fy.xls