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Msnbc.com's John Schoen chats about the debt ceiling

Msnbc.com’s John Schoen joined us for a live Web chat Wednesday to answer your questions about the debt ceiling.Here’s one of John’s answers to questions from the live chat. (See below for the full Q&A.)Mike asked:“Aren't we really painted into a corner that will take a while to extract ourselves from? Interest rates can't go any lower, stimulus cause debt bloat and uncertainty, and tax cu
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Msnbc.com’s John Schoen joined us for a live Web chat Wednesday to answer your questions about the debt ceiling.

Here’s one of John’s answers to questions from the live chat. (See below for the full Q&A.)

Mike asked:

“Aren't we really painted into a corner that will take a while to extract ourselves from? Interest rates can't go any lower, stimulus cause debt bloat and uncertainty, and tax cuts only increase debt from the revenue side. Are there any tools left to be brought to bear?”

John replied:

“That's exactly why the outlook is troubling right now. The time to balance the budget is when the economy is booming. (The same holds for consumers too, by the way.) But the borrowing of the last decade now has to be paid back. That's going to be painful - no matter how Congress goes about it. We've also seen a massive stimulus from the Federal Reserve - which recently ended its latest round of bond buying to keep interest rates low. There's talk that the Fed may come back with another round, but it's not at all clear how much good it would do.”

Here’s the full chat archive:

 

For more analysis on the debt ceiling, check out John’s recent story on the topic: After debt deal, economy in deeper peril

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