Back in the 1990s, we knew why we feared deficits. They raised interest rates and “crowded out” private borrowing. This wasn’t an abstract concern. In 1991, the interest rate on 10-year Treasurys was 7.86 percent. That meant the interest rate for private borrowing was, for the most part, much higher, choking off investment and economic growth.

Enter Clintonomics. The theory was simple: Bring down deficits, and you’d bring down interest rates. Bring down interest rates, and you’d make it easier for the private sector to invest and grow. Make it easier for the private sector to invest and grow, and the economy would boom.

The theory was correct. By the end of Clinton’s term, the interest rate on 10-year Treasurys had fallen to 5.26 percent -- lower than it had been in 30 years. And the economy was, indeed, booming. “The deficit reduction increased confidence, helped bring interest rates down, and that, in turn, helped generate and sustain the economic recovery, which, in turn, reduced the deficit further,” Treasury Secretary Robert Rubin said in 1998.

We fear deficits today, too. But we’re not sure exactly why. In 2012, the interest rate on a 10-year Treasury was a rock-bottom 1.8 percent. Whatever is holding the private sector back, it’s not the cost of borrowing.

In the absence of high interest rates now, some deficit hawks have moved on to warning that we’ll be crushed by high interest rates soon. In March of 2011, Erskine Bowles predicted we’d see a fiscal crisis in which foreign creditors stop buying our debt in “two years, you know, maybe a little less, maybe a little more.” Alan Simpson said it would be less than two years.

The two years is almost up, and the fiscal crisis is nowhere to be seen. Similarly, Japan has sustained low interest rates for over a decade despite a more crushing debt load than ours. “Bellowing about a disaster that never comes,” warned John Makin, a resident scholar at the American Enterprise Institute, “saps the momentum from sound fiscal policy.”

The problem with these dire warnings about imminent -- or, worse, ongoing -- deficit crises is that they’re applying the framework of the 1990s to the economy of the 2010s, with predictably poor results. The reason to worry about the deficit today is not that higher interest rates will crowd out private borrowing or lead to a market panic, as there’s no evidence either consequence is in the offing anytime soon. Rather, the reason to worry about the deficit today -- and, more to the point, the trends in government spending and taxation that drive it -- is that the most worthwhile kinds of government spending are getting squeezed out.

The key insight behind this theory is that some forms of government spending rise automatically and rapidly, and are very politically difficult to cut, while other forms of government spending need congressional approval every single year and have few constituencies to protect them. In the first category are Medicare and Medicaid and Social Security, all of which are projected to consume much more of the federal budget in the coming years. In the second category are things like education funding, research and development, stimulus, infrastructure investment, and even the military. And the fear is the first category is squeezing out the second category.

As David Leonhardt notes in ‘Here’s the Deal,” the federal government has been tracking spending on “Major Physical Capital, Research and Development, and Education and Training” since 1962. Over that period, it’s fallen from around 2.6 percent of GDP from the mid-60s to the mid-80s to 1.8 percent from the '80s until the financial crisis. The stimulus pushed it above 2 percent again, but that’s a temporary lift. Between the cuts from the 2011 Budget Control Act and the possible cuts from the sequester, this spending -- which is essentially the investments we make in our future -- is likely to be driven to historic lows. Meanwhile, an Urban Institute study finds that “looking solely at the federal budget, an elderly person receives close to seven federal dollars for every dollar received by a child.”

“Growth of entitlements is crowding out programs for younger families and their kids and are likely to impair social mobility,” says Isabelle Sawhill, co-director of the Center on Children and Families and the Budgeting for National Priorities Project at Brookings.

The Obama administration agrees. They've spent years trying to reach a deal with Republicans in which entitlement cuts would be paired with tax increases -- and investments in the future would be spared and even increased. That effort has largely failed, and Democrats and Republicans have settled into an odd and troubling detente on the deficit: Taxes will remain low and spending on Medicare, Social Security, and Medicaid will remain high. Everything else, however, will get the axe. The sequester, for instance, cuts deep into medical research and education, but it doesn't touch Social Security at all.

Just as interest rates posed a threat to the economy in the 1990s, insufficient government spending on research and development, infrastructure and education poses a threat going forward. Many of the technologies that drive today’s economy, from antibiotics to GPS to biotech to shale gas extraction to the Internet to jet engines, relied on federal funding to get started. And there’s little doubt that it’ll be difficult to build a 21st century economy atop a 20th century physical -- not to mention digital and educational -- infrastructure.

But the politics are tough. “When you invest in your future growth, you’re often investing in a group of people who are children and, by definition lack political power,” says Gene Sperling, director of the National Economic Council. “Or you’re investing in things that are precisely what you want government to do because no particular person captures the benefit but it instead benefits everyone.”

By contrast, when you try to raise taxes or cut back on health or retirement spending at a moment when health-care costs are rising and the population is aging, very specific people with very powerful lobbies feel the loss, and fight it.

In the 1990s, we managed to stop the federal government from crowding out the private sector. But so far, in the 2010s, we’ve failed to stop the federal government from crowding out, well, itself.