01 May 2016

Dean Baker: Patently Absurd Logic on Budget Deficits and Debt

It's spring and the budget deficit hawks are once again singing their scare songs about the deficit and the harm we are doing to our children. This is more infuriating than usual this year, with the story of the poisoning of the children of Flint fresh in our minds. Not only have the budget hawks kept many of these kids' parents from working with their obsession with balanced budgets, they blocked funding that could have been used to fix the water system in Flint and hundreds of other communities around the country.

Just to go through the basic story yet again, the government is not like a family that has to pay off its debt. If we want an analogy, at least start with a corporation that expects to exist in perpetuity. The CEO of GE doesn't go to the board and tell them about his plans to pay off the company's debt. The board doesn't want to hear about plans to pay off the debt; the board wants to hear how he will increase profits. And if that means GE has more debt 10 years from now than today, this is just fine.


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