As cartoonist Robert Storm Peterson said "It's hard to make predictions, especially about the future."
A discussion of the deficit is both critical and long overdue, but that is a fiscal discussion. Fiscal policy is related to monetary policy but not in the way that the popular narrative continues to imply. And that narrative is kept alive, by the way, by all sides of the political spectrum. Liberals and Conservatives, Democrats and Republicans, all continue to use language that entangles these two very different challenges.
Using a family budget for comparison (most family discussions are about fiscal matters) there are several questions. How much are we earning? (wages, investment income, gifts, business profits, etc.) What are our expenses? (living costs, insurance, savings, contributions, etc.) What are our goals? (home ownership, transportation and health security, retirement income, etc.) The list is endless and most people, either single or as a couple, confront pretty much the same financial decisions no matter where they fall in the economic range, from richest to poorest. Everybody faces the same questions even though the answers may be very different. Income at the poverty level, for example, may include SNAP or TANF, transportation may mean some broken-down old piece of a car or bus fare, but it's just as challenging to that family as someone independently wealthy deciding between another piece of real estate or yet another costly piece of art for the collection.
In the social context all of the above are interlaced with debt and credit questions. And this is where the discussion gets muddy, because debt and credit (two sides of the same coin) involve entities other than the family budget. How much equity do we have in the house? (HELOC) How much can we borrow against the IRA or insurance we own? How much will the bank or credit union lend us? When will that rich uncle ever die? Etc. All at once fiscal issues began to look like monetary issues. Where can we get more money?
We all live in these personal, local universes, all of which are inside the boundaries of the country, so it is easy to imagine that the community of nations is simply the same dynamic writ large. In a sense it is, but most Americans are not in a position to know where this country falls in the global scheme of things. This is where real monetary policy enters the picture. Stated simply, we (like all other countries) issue our own money. And we then decide how to spend it. And whether or not the rest of the world accepts our money is only indirectly related to how we spend it.
When a bank tells me I have a ten thousand dollar line of credit it makes no difference whether I use it to buy a car, go on vacation, or pay for extraordinary medical bills -- my credit rating is not related to how I spend money, but my overall financial picture coupled with my history of repaying debts. The lending institution doesn't care whether the loan is repaid by a gift from that rich uncle who finally died or me working another job. As long as the debt is being repaid in accordance with the loan agreement my line of credit remains safe. Now thanks to several credit rating agencies if I go elsewhere to borrow MORE, my bank will not smile favorably on that new debt. That's when my credit starts to tank.
Switching now to the global picture, all countries print their own money but the value of those currencies on the world financial market is not very different from corn, petroleum or pork bellies. The values of national currencies rise and fall according to supply and demand, and the outfits that grade them use the same arithmetic that governs soybeans. In the case of currencies it is not all that straightforward, but the dynamic is not really that different.
This is why conversations that mention Greece and America in the same sentence reveal more paranoia and ignorance than any real understanding of global finance. The reason that the US credit rating dropped a notch last year was not that we were running a deficit (a fiscal problem) but that it appeared that the number of new dollars was about to vanish (a monetary problem) because every country determines how much of its own money to print and the rest of the world determines its value in a global market. This is why monetary issues are different from fiscal issues.
Other matters such as inflation, bad debts, bubbles and natural disasters all have terrible, sometimes catastrophic impact on the stability of national currencies, but those are as much a part of life on earth as the weather. Risk management is the reason we have a variety of insurance, from the simple types we all know about individually to the social types such as FICA, PBGC, Social Security, etc.
The value and security of national currencies are related to the country's economy. That is why we hear so much mention of GDP -- gross domestic product. As long as national expenses do not exceed GDP the country can continue to pay whatever debts it incurs. During a "recession" the GDP sinks and creditors start to get jumpy, because if that trend is not turned around outstanding debts may not be repaid as expected. That's why money pumped into the economy (the nasty word that many hate is "stimulus") typically results in more economic activity resulting in a "recovery." But the overall health of a national economy is relative to how money is spent, not how much is in circulation.
We can have a long conversation about fiscal affairs but the conversation about monetary matters can be very short. In a nutshell, as long as the rest of the world is willing to invest their assets in US Treasury notes there is no danger that printing more money (i.e. issuing more Treasury notes) is a problem. In fact, the more US debt the rest of the world carries, the greater their need to insure that they will do all they can (whether "they" is China, European investors or Arab millionaires) to insure the security and stability of the US economy.
I don't know what the president will do to 'splain these facts to Congress, but my guess is that when he breaks it down they will catch on. He's a pretty good 'splainer. If not, he still has the Fourteenth Amendment as his constitutional safety net.