The good bad news is that today’s public debts have a very different character. Ownership is more evenly distributed, as most bonds are held institutionally by insurance and pension funds and other financial institutions. Taxation everywhere is far more progressive than it was in the early 19th century, a time when income taxes were regarded as wartime expedients. And, as we have seen, a significant portion of today’s public debts are held by central banks, meaning that one part of the government owes money to another.

In an important new paper, economists Jason Furman and Lawrence Summers argue that public borrowing today offers something very like that rarity in economics: a free lunch. The key is the historically low level of nominal and real interest rates. On the one hand, low rates mean that “monetary policy cannot be relied on to stabilize the economy.” On the other hand, low rates also mean that “fiscal expansions themselves can improve fiscal sustainability by raising GDP more than they raise debt and interest payments.”

Today’s interest rates mean that debt/GDP ratios are a bad way to measure debt burdens. After all, the accumulated public debt is a stock, whereas GDP is a flow. If debt is measured relative to estimates of the present value of GDP or prospective tax receipts, then “current debt levels are at low rather than high levels.”

Furman and Summers are not saying — as the proponents of modern monetary theory do — that debt doesn’t matter and the sky is the limit. They are simply arguing that “traditional ideas of a cyclically balanced budget on the grounds that [high debt] would likely lead to inadequate growth and excessive financial instability” are anachronistic. Fiscal policy can support growth with ongoing deficits so long as real debt service (i.e., interest payments adjusted for inflation) does not rise above 2% of GDP over the coming decade.

If governments borrow to finance investment, then, so much the better because “many public investments pay for themselves, or come close to paying for themselves, and the risk of not undertaking these investments is larger than the risk of doing too little deficit reduction.”

“Currently,” Furman and Summers conclude, “the primary worry for policy in the United States and several other countries is doing too little to expand the debt, not doing too much.” Democrats hoping for dual victories in next month’s Senate run-off elections in Georgia will read these words with tears of joy in their eyes. If they can only replace Sen. Mitch McConnell with Vice President-elect Kamala Harris as master/mistress of the Senate, they can fulfill their campaign pledges of spending up to $4 trillion, with nothing to fear from the bond vigilantes that terrorized former President Bill Clinton’s administration in its early days.

Furman and Summers are by no means the first to argue that debt-to-GDP is the wrong way to measure fiscal sustainability. In 2001’s “The Cash Nexus,”for example, I made a similar point: What really matters is keeping the real growth rate above the real debt service rate. Like Furman and Summers, I cited the pioneering work of Laurence Kotlikoff, who focuses on the present value of projected spending and revenues, as well as on the distributional effects of fiscal policy between generations.

And credit where credit is due. In the debates on interest rates and inflation that followed the global financial crisis, Summers was the winner. His 2014 lecture on “secular stagnation” — which argued that for a variety of structural reasons (e.g. aging populations and inequality) interest rates would remain stuck close to zero for the foreseeable future — proved prescient. Those of us who worried (as I did briefly) that Fed purchases of bonds (quantitative easing) might be inflationary were wrong. So were the Fed economists who wanted to normalize monetary policy by raising rates preemptively. (Remember how well that went two years ago?)

The problem is that for there to be a free lunch, financed by borrowing that pays for itself, secular stagnation has to continue: In other words, interest rates have to stay at their present low levels, which isn’t what the CBO expects. In its most recent long-run forecasts, nominal and real rates rise over the course of the 2020s. That means that net interest payments would rise above 2% of GDP from 2030 onward and hit 8.1% in 2050.