Perhaps you did or did not make it through the entire lecture and Q&A with Prof Niall Ferguson in yesterday’s post. Either way, you may have missed the key forecast that underlies all of his thinking about the future of the American economic system:

The U.S. is poised to run major budget deficits in addition to its current debt through 2080.

Take a second to think about that.

This morning’s papers, in advance of the Republican takeover of the House of Representatives, are reporting the upcoming “serious budget cuts” to be proposed by the new house members. It makes for good copy – after all, things might soon be different!

Let’s look at the actual projections from the Congressional Budget Office.

Ferguson points out that there is not currently the political will to reverse this trend since it involves the sweeping entitlements of Medicare and Medicaid. These two programs alone will, by 2080, equal the entire size of the United States government in 2010, never mind military and education and all the rest. Ferguson is not bullish on the notion that future generations of politicos will stare into the eyes of retiring Baby Boomers and say, “sorry, no pensions for you, and you can buy your own healthcare.”

So America, despite its headlines, will still engage in deficit spending unless something very drastic and unexpected comes to pass. That’s an important long view to have as the politicians take to the airways.