How is deficit spending justified?

Question

What are the advantages to doing it? When is it not alright to do it? I hate to draw things by party line, but Republican presidents Reagan and Bush II seem to be the worst offenders. Albeit, Clinton only balanced the budget due to pressure from congress, but at least he did something.
How dangerous is our national debt? Will we be pushing wheelbarrows of Franklins to the store to do the weekly grocery shopping?

Yeah, but to use your analogy, Christopher, what would happen if I went into debt by going to college, bought three houses, ten cars, a yacht, and started five businesses in the course of a year? If I could find someone to give me the money, I would only be postponing my time on the street.

Answer 1

Where to start and should I? Only time of war should deficit spening be allowed, and what are "they" going to do if the debt isn't paid????

Answer 2

First and foremost: Presidents DO NOT MAKE BUDGETS. Congress makes the budget, passes all the funding bills. The presidents make a budget and submits it to congress, but it is not the one that gets passed. Don't believe me - google search it.

Second, when you purchase a large item, like a house or a car, your purchase it on credit, unless you are very rich. However, when the US Government spends 100 million to purchase a aircraft carrier, or 1 million to build a new post office distribution center, they have to pay for it then, when it is delivered. SO, in order to purchase assets, they "deficit spend" by issuing bonds. This is no different than what you did when you bought a house. Then the government pays back that debt plus interest to bond holders.

When we deficit spend, not talking right now (war time economy), but in general, we are getting some future value in the asset purchased...national defense, post offices, cars, highways, airports, buildings, national forrests etc. Lets say an aircraft carrier bought today lasts 50 years. That is a benefit that your children and grand children get from deficit spending today - and the bonds will have already been paid off.

About the national debt (the accumulation of yearly deficit spending)...If the US Government sold each and every asset it had, at fair market value, do you think they would be able to pay off the total debt? Keep in mind, the US Government owns millions of acres of prime real-estate, vehicles, military vehicles, weapons systems, buildings, books, historical items in museums, pens, paper, computers, forklifts etc. The government owns several of any item you can think of. THerefore, although they are in debt, I am sure if you could do a true balance sheet, you would find that the government is not bankrupt or insolvent.

You will never be pushing wheelbarrows to the store. There are too many market "checkvalves" in place now. Keep in mind also, one persons liability is another persons asset.

Answer 3

Borrowing by the government and by citizens allows everyone to spend more than they make and keeps the economy going so we can buy from China and have nice vacations on Visa and granite counter tops on our home equity loan. Having an incompetent like Greenspan facilitates all of this by keeping interest rates too low for too long. This created a housing bubble after the stock market bubble collapsed. This along with printing more money to cover the deficit allows the Chinese to buy our debt so that eventually they will either own our country or decide not to finance the deficit or demand higher interest rates. - and then we are screwed. When this happens we can either look to create another bubble (or take a bath). Clinton balanced the budget because the stock market bubble created tremendous tax revenues from the sale of stock. Unfortunately house gains are tax free - so no tax revenue out of this bubble - just lots of stupid spending. We borrow from the Chinese to finance our wars, congress sleeps and takes lobby money, wall street ignores this for short term trading commission, the cheerleaders on the financial shows just like the advertising revenue. On every corner comes a new bank or drug store - we are a service economy expert in just moving money around all financed by debt. The Alfred E. Neuman population of this country is too busy watching Idol and Nascar to care. By gold and learn Chinese.

Answer 4

You may be too young to remember Reagan, but the reason his deficits were so high in the light of record revenue brought into the treasury as a result of his tax cuts were from the Democrats reneging on there promise to cut or maintain current spending levels. Instead they passed the biggest increase in spending on social programs since FDR

Answer 5

In times of economic struggle it can be beneficial, as it allows you to handle the economic slumps in times of economic strength.

When is it not alright to do it? When you're cutting taxes at the same time!! It helps him politically and is harmful overall to the country. Clinton balanced the budget AGAINST his party's wishes. His party wanted him to push liberal legislation, but he was a fiscal conservative.

How dangerous is our national debt? Pretty damn dangerous. It's stupid the way Bush is running the economy.

Answer 6

John Maynard Keynes developed deficit spending in the 1930's as I remember it to help lead England and the US out of the depression. then the government under Bush1 and Reagan etc. decided that it was a good plan to disguise spending huge sums as a positive thing. But the world economies are very different than in the day of Keynes. Overall deficit spending is a very shaky idea. that has gained popularity but we haven't seen the end result yet and that could terrible

Answer 7

It takes money to make money.
It was the smartest thing that got the US out of the depression.

Try going to college or buying a house without being in debt.

Would you rather live in the street and not be in debt, or be in a house and be in debt?

Answer 8

The government can do whatever they want and get away with it. Whos gonna stop them?

Answer 9

three simple words: because they can