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He was once called “Dr. Doom and Gloom” on Wall Street. Not everything has changed for Kent Smetters, who runs the Penn Wharton Budget Model. His economic predictions remain gloomy, but imminent doom isn’t around the corner.
In his view, doom will land on America’s doorstep between 2045 and 2050, the breaking point for the U.S. economy. That’s the moment when, as Smetters sees it, the cost of interest payments on the national debt would become so large for the federal government that even a broad-based tax increase wouldn’t cut it anymore.
At that point, Smetters says, the U.S. government would enter either an explicit or implicit default, both with calamitous consequences. An explicit default renders the U.S. a global deadbeat. An…
