Governments SHOULD run a deficit. It should be approximately equal to the fraction of expenditure that is on items that will be used into the future - if they build a bridge that will be in use in 50 years, then the people who use the bridge 50 years from now should pay their share. They neither need nor deserve to be subsidised by us.
A surplus is immoral - at the point where the deficit falls below the long term infrastructure spending, taxation becomes unjustified. I have no problem with faxes to pay for government spending. But taking more than they spend is simply wrong.
Governments don't retire, or get sick, or get fired - their income is not at risk in the way that a householder's income is at risk. Saving for a rainy day is nonsensical for sovereign governments.
This insane idea that government finance is basically household finance writ large needs to die. Deficit spending should be routine and normal. Surplus should be rare - and a small surplus is as much an indicator of a problem as is a very large deficit.
You can tell when deficit is too large, because you get excessive inflation. Responding to inflation by raising taxes is the answer. If that puts you in surplus, then there's a bubble forming - and deflation asset bubbles is the one justifiable reason for running a surplus.
That's not the Keynesian theory. According to Keynes, deficits should be run during recessions, and surplusses should be run when during times of growth. The average budget surplus/deficit should be zero.
The problem is, no mainstream politician (and only mainstream politicians are considered to be viable and worth voting for ... just imagine what would happen if people voted for good candidates for a change...) can resist spending the money. No mainstream politician can cut any budget because no mainstream politician has the fortitude to listen to the screams of those benefiting from those budget items.
The idea of constant deficits fits in better with Keynes' idea of "in the long run we're all dead".
This insane idea that the government must always run a deficit needs to die. Even Keynes didn't go that far. He was wrong about almost everything, but the idea of constant deficits (which are the same as constant inflation) is even more wrong. This is comparable to Keynes saying "2+2=5" and someone saying "Keynes was wrong, 2+buffalo=creationism".
Keynes viewed the economy as composed of many trends all poised to spiral out of control, barely held in check by other trends poised to spiral out of control in the other direction. He saw the guiding hand of government as the best way to balance these competing and conflicting trends. Of course the correct view of economics is equilibrium instead of spirals. But there is one trend that does become a death spiral and that is when the idea of constant deficits takes root. Then you get, slowly or quickly, the death spiral that only ends with runaway debt and inflation. It is inevitable, although not always quick.
Governments don't "get sick" but they do go bankrupt. They don't "get fired", they get overthrown. They don't retire, but they do collapse.
Even Keynes, who was very wrong, knew better than to advocate always running a deficit.
