Without a sustained recovery in national output to 3% growth or more and without putting millions more Americans back to work, there is no politically feasible spending reduction or tax increase that could balance the budget even if Ron Paul ran Congress. Tax revenues have remained below 16% of GDP for the last four years because the economy is in a slow growth rut. The growth deficit, not the budget deficit, is the great issue of our time.

The Reagan years offer an instructive history, because the economy's troubles in the 1970s and the steep drop in real middle-class incomes (some $4,000 per household since 2009) were so similar to today's. Reagan put pro-growth tax cuts and a rebuilt military ahead of his ambitions to balance the budget, and he was right.

After his tax cuts fully kicked in on January 1, 1983, annual growth averaged some 4% over five years, while employment gains were swift and long-lasting. The deficit fell in half from a peak of 6% of GDP in 1983 to under 3% in 1989.