Let's hear it for higher and higher public debt!
100% guaranteed effective -- nothing can go wrong!
Also, any falsehood is OK if it promotes raising the debt higher.
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Arithmetically, if tax revenues grow at the rate that the economy (inflation plus "real" growth) does while gov't spending grows only at the rate of inflation, any deficit has to decline.
Promises! promises! But what's the reality since this debt culture began?
Whatever the arithmetic and convoluted rationale, the debt has consistently increased
percentagewise (beginning mainly in the 1930s) and will continue to do so, by all indications, so that the debt percent will become twice as high as it is now, as a consistent long-term pattern with ups-and-downs along the way. The Debt/GDP today is at the all-time record high. To not change anything and to continue the raise-the-debt-ceiling crusade means it will increase even higher.
All the arguments here from virtually everyone posting on this topic are based on the premise that
the annual federal deficits should continue to increase
the current federal deficit should increase to $2 or $3 trillion or higher
because the "economic stimulus" from the deficits are good for the economy no matter how high they go and no matter what the money is spent on. Plus there's so much we want which we could spend those trillions on -- you can't deny it -- many good causes we can find for spending so much more. Why not take the dive, since we're told that only good outcomes are possible with higher public debt?
Everyone posting here has expressed the above sentiment, and no sentiment that the deficits are too high. There is a basic instinct that higher public debt is beneficial as an "economic stimulus" even if the money borrowed is wasted, because even then the nation benefits from the "economic stimulus" (providing the "jobs! jobs! jobs!) to get the riff-raff off the streets.
Even 1 or 2 who say this is not their sentiment never express a sentiment to stop the increasing debt. In other words, the only sentiment they express is that the debt has to increase, but there is also an Apology which takes offense at being accused of harboring the higher-debt sentiment. I.e., the only argument against higher debt is the offense at being accused of wanting higher debt. When your only argument against higher debt is that you object to being accused of harboring a sentiment for higher debt (while at the same time you keep expressing the same sentiment for higher debt) --- guess what? You're a higher-debt fanatic right along with all the other more naked crusaders for the higher-debt religion.
We/you have to ask: Why is it that there's no word suggesting that maybe this is too much? Is it possible we've crossed the line? Why is it taboo to raise that question? except in cases to pretend you care about it in order to appease the debt doubters and win them over?
No, all the sentiment is to raise the debt higher still -- as a higher % of the economy -- with never a suggested rule about how much is too much. It's clear that there is some kind of belief in a Magical Power, or Mystical Formula, which flows into the economy, inspiring or triggering some Cosmic Force which will save us from any bad consequences later -- We can just feel the magic Vibes radiating out from a special Something which has to work if we just have faith. Never think about the price paid later when the debt comes due -- there's an Infinite Source of future lenders from which the current debt can be paid, with no need to ever worry about it -- "In the long run, we're all dead!!!"
(famous quote from a major founder of this religious cult).
This quote (or paraphrase of it) is repeated again and again by the members of this cult.
But economically and financially literate people understand that debt use can be beneficial.
translation: the current deficit (about 1.2 - 1.6 trillion) is not enough.
Notice that nothing negative is ever said about the higher and higher debt -- never any doubt that it might be more harm than good. Only think positive, be optimistic, never skeptical of the promise of a magical "growing economy" to pay for it and shower abundant blessings upon our nation.
(In 100 years from now it's possible that such optimism will become scientific, based on fact, if the development of fusion power succeeds, and a New Industrial Revolution will be made possible to save us from climate change, and it will be easy to pay for it either with more debt or higher taxes (because of a better economy), due to the much greater abundance of clean energy.)
Today we have no such hope based on science, but only on ideological mystical fanaticism, and blind dedication to the Magic of higher and higher Debt: The deficit should go up another half trillion or so every year, and there should be no means to stop the increase, such as the requirement to vote on raising the debt ceiling.
No one is giving any reason why the deficit should not go up another half trillion or so.
The only question is whether there are sufficient resources we can tap into in order to pay the cost later (i.e., "cost" due to the waste and poor decisions by the elected demagogues). Even then the net economic loss is worth it because of the "economic stimulus" from the spending which will generate more "jobs! jobs! jobs!" (especially factory jobs) if we just trust our higher-debt gurus Bernie Sanders and Donald Trump. Take your pick, whether you feel more inspired by the corporate-bashing and employer-bashing Progressive Demagoguery, or the nativistic nationalistic China-bashing Right-wing Demagoguery. Those are your 2 debt-raising choices: Vote for the Populist Demagogue of your choice, but vote.
Of course everyone denies that this is what they're saying, especially those on the Left. But notice: no one ever says the debt might be too high or that the "jobs" are not worth it when the money is wasted. No, even when the money spent is wasted, still that "economic stimulus" must magically goose the economy and make us better off than if we try to cut the "fat" or distinguish efficient spending from waste. No one is saying that a higher deficit might be more harm than good. Without exception, all the arguments are for IN
creasing the debt, never for reducing it.
Why do those demanding the debt increase never express concern about waste? or always dismiss this? or never define what limit is appropriate? It's because their faith is in the basic magic of the debt per se. So this debt automatically has to make our economy better regardless if the money is wasted. And why are they so sure that it makes the economy better no matter what?
From a purely financial point of view, when the financial returns from the use of debt exceed the financial expense of borrowing, the borrower adds to its income and net wealth.
But there's no evidence that this is the overall result of our use of debt for the last 90 years, since we adopted the policy of permanent ongoing peacetime deficits which have generally increased as a percent of the economy.
The belief that the economy is better off because of this increased debt
is based on blind faith only. When it began, in 1931-33, the result in the years following was much worse than in earlier depressions when "economic stimulus" deficits were not used. All the evidence is that the "economic stimulus" deficits of Hoover/FDR made the economy worse, not better.
Since then we've not had a test of the "economic stimulus" theory, to be able to do the comparisons, as we've consistently followed this theory in all recessions. But there's no evidence that it has ever made the economy better. The only benefit is the instant gratification gained at the point where the borrowed money is spent, which of course always happens initially, with no way to calculate and compare the damage inflicted later when the debts have to be repaid.
The instant gratification of some new "jobs! jobs! jobs!" is the only practical observable benefit which can ever be cited as the outcome following any new "economic stimulus" deficits. No long-term benefit can be demonstrated by facts, to prove a better outcome than if there had been no such "economic stimulus."
From an economic point of view, when the benefits (financial and non-cash) from debt use exceed the cost of obtaining the funds, the borrower is better off.
But there's no evidence that this has happened, other than unusual emergency crisis spending -- WW2, crash of 2008, 2020-21 pandemic. Though there is evidence that the opposite happened in the years following the extra debt beginning in 1931-33. In that case all indications are that the country's economy was made worse, not better. But in cases since WW2 there is no way to make the comparisons for measuring the outcomes. Each side, pro & con, can ideologically distort the facts to prove that the "stimulus" really succeeded or did not.
(For clarity, the "cost of obtaining the funds" cannot just be the interest payment. It doesn't matter what the interest is if the debt is too high.
Even if it's ZERO interest, it's too high and makes the economy worse, not better. Don't pretend that a low interest rate automatically makes the debt worth it -- it does not.)
In my view, much of the debate revolves around the value of the non-cash flow benefits from our current use of debt.
There is no reliable calculation of any such benefits, when the cost of repayment is factored in. The only benefit is the instant gratification at point A which has to be repaid at point B. No one has given any evidence of any long-term net gain from these "economic stimulus" deficits.
You can insist ideologically
that after WW2 we had provable benefits from the "economic stimulus" deficits. But exactly the opposite can also be argued ideologically, with neither side really having the necessary facts to make the comparison. It's only ideology, not fact.
But for the 1931-33 deficits we have objective evidence or facts which cannot be denied. I.e., the bad results of 1932-1940, which are undeniable and can be compared to the much better results in earlier cases after an economic crash. In this case, the facts of history are known by everyone, Left and Right.
True, but gov'ts have tools to pay interest that households don't: taxes and money creation.
The economic talking heads always say the government is different than a household but both have to pay interest on the debt that they borrowed.
translation: Govt can more easily repay debt, so there's no need to worry about the riskiness of the investment -- the repayment is automatic because it doesn't rely on the need for the money to be spent efficiently without waste, and actually the investment can be a total waste and yet it will still be repaid out of already-existing wealth which can be depleted -- so, not to worry -- the higher debt is worth it, to pay for any wasteful spending no matter how inefficient or costly to someone later.
In addition, the US gov't has an advantage over most households in that creditors worldwide seem willing to lend it funds whenever it wants.
Same logic again -- this is the only argument offered for why we should keep increasing the deficits: there's plenty of potential lenders who know they'll be repaid, and plenty of already-existing resources from which to repay the debt, regardless if all the money spent is wasted. And so there's no need to make sure the debt generates any new wealth from which to pay for it later. So, we have the power to run up higher debt, and therefore we should always do so, regardless how wasteful that spending might be.
Such a disregard for whether the spending is worth it cannot make any sense unless there is a fundamental premise that
All public debt is good for the economy, no matter how much of it goes to waste -- as long as we have a rich economy we can deplete for the repayment, so --
Go for it!!
This is the basic logic for why the debt ceiling has to always be raised. Many of those making the argument say frankly that it's beneficial regardless if there is waste, because of the "economic stimulus" -- I.e., in the end it's all about
"jobs! jobs! jobs! jobs! jobs! jobs! jobs!"
This probably is the instant-gratification type of jobs. However, the Jobs Fanatics might believe that the "jobs" created will be permanent, not just temporary. Maybe the uncompetitive jobs created by the "stimulus" deficits can be reinforced by still more such deficits into the future. This can't be proved one way or the other. It's possible that uncompetitive jobs and other waste can be perpetuated again and again into the future, ad infinitum. All we know for sure is that the deficits to "create jobs" are always successful immediately to cause instant jobs, however wasteful, and there's no evidence that these are worth it to those who have to pay the cost several years later.
E.g., if a plane flies over a town and drops 100 billion dollars down to flutter randomly to various locations, it is an Absolute Certainty that the unemployment rate in that town will soon decrease measurably, and some economists or ideologues of one kind or another will jump for joy and cheer on the amazing "economic recovery" which takes place in that lucky town -- like winning the lottery. And the econ pundits will even produce mathematical formulas and graphs and charts to prove that their brilliant theories explain how this remarkable "recovery" took place.