Governments are living in a fiscal fantasyland

budgets is always part of politics, but today’s fiscal brinkmanship is truly frightening. In America Democrats and Republicans are playing a game of chicken over raising . As the drama intensifies, the stakes are getting dangerously high. Janet Yellen, the treasury secretary, says her department could run out of cash to pay the government’s bills on June 1st if no deal is struck. Investors are beginning to price in the risk of what would be America’s first-ever sovereign default.The political point-scoring also misses a bigger and more enduring problem. America’s budget deficit is set to balloon as its population ages, the cost of handouts swells and . We estimate that deficits could reach around 7% of a year by the end of this decade—shortfalls America has not seen outside of wars and economic slumps. Worryingly, no one has a sensible plan to shrink them.