The Circle of Debt

I have a friend who detests President Obama, and to be fair, many other politicians, because they spend more than they take in. Any conversation about politics may result in him popping up the debt clock on his computer, it's numbers furiously clicking higher.

Like President Clinton before him, President Obama has substantially reduced the deficit, at a faster clip than anyone thought possible.  We are not yet in a surplus situation, but the current President was left in a much deeper hole by his predecessor, really earth-shattering deficits.

The deficit, although shrinking, could shrink faster if we had a Congress willing to more aggressively spend our way out of the near-depression we were in, or raise additional revenues.  But with the Republican Party firmly in the grips of the far right Tea Party, we're lucky to have paved roads much less an economic recovery.

I pointed out the rapidly shrinking deficit to him, and he quickly declared that didn't matter a whit, and popped back up the rapidly whirring debt clock.

I sympathize. I really do.  In the long run, the debt could cause some problems.  If it exceeded a certain ratio of GDP, and others believed that the United States would not honor its debts, it could be bad.  Which is why the Tea Party playing chicken with whether to raise the debt ceiling was so dangerous. It led to the perception that we might just be stupid enough to default.  We are still suffering the effects of that moronic brinkmanship.

The national debt is NOT like your family budget.  You can't create Treasury bonds.  You can't print money. You don't have to smooth out the macro-economics of a nation, and often an entire planet.

Restoring the economy after a recession, protecting the country in case of crisis and conflict, helping the disadvantaged (we're not really Ayn Randian Social Darwinists are we?), education and infrastructure are vitally important as well.  More important than the size of the debt at any particular moment.  The greatest cure for resolving these problems is a growing economy, and it takes money to make money.  Austerity will lead to decline and doom, whereas targeted investment is the best shot at restored prosperity, particularly a prosperity that extends to all, and not just a few at the top.

The debt problem, such as it is, may never be solved.  That's because as soon as we get into surplus, the politicians go crazy.  They increase spending on stupid stuff, cut taxes (particularly to the wealthy), enlarge corporate subsidies.  This is not academic or theoretical.  It's already happened.  It took a couple of short years for President Bush Jr, to turn our surpluses into massive deficits. Yes, either political side is capable of doing this, but frankly, Republicans have made it an art-form in the modern era.

So, my friend, I think the President is doing the best he can with the deficit AND the debt.  If you want more done, you;ll have to take a more careful look at who you vote for in the legislative races, and the messages we send them. The quicker we help each other, the faster the economy will grow.  The faster the economy grows, the more in control the debt becomes.