Why is a national debt good for the U.S. economy?

Question

In my previous post http://answers.yahoo.com/question/?link=best&qid=20060928202923AA9Qh2P&r=w&pa=F5xxBXHpPmKSlmhy00sKlAnRtuICkv_7ik1PrbpNQ0yTvBQVRP9DGQUjcPQiciHqHbR8eiApXWOnmqF.nkCpDw--

several people stated that having a national debt is good for the economy. Can someone please explain how a national debt is good for the economy?

Keepsonandon...the reason we persist in bringing up topics we know nothing about is that this is a great way to learn about it from people who just might understand it, and thus can explain it to other people.

Answer 1

Why do people persist in adressing topics they know nothing about?

The national debt is ruinous to the economy. In a couple of generations, the U.S. has gone from being the world's greatest creditor nation to the world's largest debtor nation. China owns us, by virtue of having bought our government bonds so we can continue to finance the war in Iraq. Tax cuts have contributed to the deficit, which is now over $8 TRILLION and growing every second. Go here for a graphic demonstration:
http://zfacts.com/p/461.html

It's analagous to credit card debt, to use a familiar example. Suppose you max out your credit card and the balance you owe is equal to your annual income. Interest accrues on the unpaid balance every month. If you continue to make the minimum monthly payment, you will not live long enough to discharge all the debt.

What's ruining us is not only that we've spent more than we take in, but that we've sold our country to foreign investors and are paying 19% interest to them on these borrowed funds. Our grandchildren wil still be paying off the debt that the Bush administration has incurred to fund a pointless war. Thanks, Dubya!

Answer 2

The U.S. having debt is in itself not a good thing. However, the budget deficit that leads to government debt sometimes helps to turn the economy from a recession or helps it to continue with an expansion. However, although I am a conservative, I believe that the current debt amounts are at dangerous levels. I also believe that unless this administration does something to either curb spending or increase revenues(i.e. more taxes), we will be leaving future generations with a nearly unbearable burden(large amounts of debt coupled with other liabilities such as Medicare and Social Security)
I also want to address Keepsondancing's thanksgiving to Bush. This trend of ballooning deficit and debt should not be blamed solely on Bush. These issues began 30 years ago with the Great Society Program and the Vietnam War, and little has been done by any administration since then to curb this problem. And please don't be one of the countless idiots who point out the fact that Clinton ran a budget Surplus. The enourmous amounts of paper profits provided by the Internet boom provided tax revenues that could have given any adminsitration a surplus, especially one who drastically cuts back this nation's ability to defend itself.

Answer 3

It isn't. There are managable levels of debt, where it is not actually harmful, but running a budget deficit that contributes to a growing federal debt is a bad thing - it restrics the private economy's access to capital (loans and investment) as some of the world's available cash is now invested in the government. And of course, the interest paid on the debt will further restrict the amount of available government funding in future years, thus encouraging more deficit spending.
Once the yearly deficit gets over about 5% or the total debt gets over 50% of GDP it begins to undermine the confidence of the lending/investing parties in the government's ability to repay the money, and thus it becomes harder for the capial-addicted budget to obtain needed investment/lending.

Answer 4

well... it's good because it allows the government to cut taxes, so people/businesses have more money to put into the economy, which stimulates the economy, even if they shouldn't be cutting taxes.... because we're at war

but, it's only good until people stop loaning us money... then it get very, very bad very, very quickly...

kind of like if you write a bunch of bad checks at the bank... you get tons of great stuff... until the cops come...

Answer 5

Same as any loan.Good for the short term.US couldnt operate without it.Over time cost interest,but its all relative.

Answer 6

Its isn't. Not really. That money costs interest.