Obama and his minions are crowing about the fact that the federal budget deficit has come down from over a trillion in each of the last four years to merely $680 billion this year. Obviously, the country is on the right track — or is it?
In this Freeman piece today, Doug Bandow looks at the long-term situation, which is horrible. Having to borrow $680 billion this year is bad, but the deficit will inevitably start to grow again in just a few years. And no, all of that borrowing is not benign, as Keynesians claim (deficits stimulate the economy they say,and besides, “we only owe it to ourselves), because it means diverting resources away from productive uses and into paying the debt service costs for needless and wasteful borrowing in the past.
I’ll end by saying, You might be a progressive if you think that government debt never has adverse consequences.