Lawrence Lindsey says that America's debt problem is much larger than any budget deal currently under discussion. The first of his three points is scary enough:
First, a normalization of interest rates would upend any budgetary deal if and when one should occur. At present, the average cost of Treasury borrowing is 2.5%. The average over the last two decades was 5.7%. Should we ramp up to the higher number, annual interest expenses would be roughly $420 billion higher in 2014 and $700 billion higher in 2020.
The 10-year rise in interest expense would be $4.9 trillion higher under "normalized" rates than under the current cost of borrowing. Compare that to the $2 trillion estimate of what the current talks about long-term deficit reduction may produce, and it becomes obvious that the gains from the current deficit-reduction efforts could be wiped out by normalization in the bond market.
Printing money (or "quantitative easing") will eventually create inflation, which the Fed will try to fight by increasing interest rates. Higher rates mean that our interest payments will increase, which means that our deficit problem will get even worse. Wash, rinse, and repeat. (Except without the "wash, rinse" part.)