Day of Reckoning: The Consequences of American Economic Policy Under Reagan and After.

• Author: Murray, Alan

Day of Reckoning: The Consequences of American Economic Policy Under Reagan and After. Benjamin M. Friedman. Random House, $19.95. On Borrowed Time: How the Growth in Entitlements Spending Threatens America's Future. Peter G. Peterson, Neil Howe. ICS Press, $24.75. Rendezvous with Reality: The American Economy after Reagan. Murray Weidenbaum. Basic Books, $19.95. It's no surprise that many Americans have given up worrying about budget deficits. After all, the economic Cassandras who warned of their dire effects in the early 1980s turned out to be dismally wrong.

In 1981, for instance, a host of economists told us that deficits cause inflation. The following year, inflation collapsed, despite the biggest deficit in American history. Then in 1982 they told us deficits would stifle the expansion. Within months, the economy began its recovery at a spectacular pace. Ever agile, the prophets of budget doom argued deficits would cause the economy to overheat and quickly lead to another recession. Today, almost six years into the longest peacetime expansion on record, that warning also rings hollow. Most Americans may still believe that deficits matter, but they've lost all faith in the economics profession to tell them how.

That's too bad. Because finally, a consensus has emerged among mainstream economists that provides a convincing view of the deficit's dangers. The new story is more modest than before, and therefore more credible. Its basic point is this: Budget deficits may or may not lead to inflation or recession. But deficits certainly lead to debt. And sooner or later, one way or another, debt must be repaid.

The consensus is reflected in three new books by prominent economists, each of whom comes from a different point on the political spectrum. Benjamin Friedman, a Harvard professor, is relentlessly anti-Reagan. Peter Peterson, investment banker and former Nixon administration official, attempts to hold himself above partisan politics and parcels out blame to Reagan and his rivals alike. And Murray Weidenbaum, former chief economic adviser to President Reagan, does his part to defend his former boss. But all three adopt a common theme whose nature is readily apparent in their foreboding titles: Day of Reckoning, On Borrowed Time, and Rendezvous with Reality'.

Friedman's Day of Reckoning is especially unforgiving in its critique of Reagan's policies. Those policies were not just wrong, in Friedman's view; they "violated the basic moral...