The Federal Deficit as a threat to the US Economy
The US government have been running a deficit for decades now. This poses a real threat to the economy. The real danger is that as the population gets older the government are going to have to spend even more in the future. If you we can't balance the budget now how are we going to balance the budget when the baby boomers retire. There are a lot of serious economic problems that result from large deficits and the government need to come up with a plan to deal with this.
The biggest threat that the federal deficit puts on the US economy is the threat the people who loaned the government money are going to want it back. When the government runs a deficit it is borrowing money to pay its bills. There is a chance that the people who lend the government money, that is people who buy bonds, will decide that the government won't be able to pay the money that it owes and no longer be willing to loan the country money. This would be a disaster since it would require the government to either massively raise taxes or massively cut programs to pay the bills.
While the government will probably always be able to borrow money from somebody a high federal deficit would mean that it costs more. This is the same reason that it costs more for somebody with bad credit to take a loan then it does for somebody with good credit. It's all about the risk involved. Basically when the government has a high deficit it is the same as having bad credit. That means that to get people to loan them money they have to pay higher interest rates. This means that more of the tax revenue that gets collected goes towards servicing the debt rather than to paying for programs.
The other problem that high interest rates creates is that it makes it harder for businesses to raise the money they need. Investors are naturally going to put their money into whatever offers the best return. If the government is offering higher interest rates than companies looking to borrow money will need to offer higher interest rates as well to attract investors. That is going mean the most companies will be discouraged from investing in growing their business which will be a drag on the economy.
Ultimately a high federal deficit is going to result in inflation. The more it costs to borrow money the more companies are going to have to charge for their products inevitably this is going to cause prices to rise pretty much across the board. The real danger to the economy is that inflation caused by the federal deficit is not the kind of inflation that accompanies a growing economy. In fact it is much worse; you will have high inflation at a time when the economy is shrinking.