So I'll give this whole topic one more try. Large short-term deficits don't matter, but growing long-term deficits--that is, deficits that grow faster than our ability to pay them, that is, than GDP--are very bad.
Consider this analogy. Say you're an independent contractor of some kind who depends on a car for jobs. Your car breaks down. While the car is broken down, your income is diminished, but you don't have enough money saved to pay for repairs with cash. So what do you do? Do you wait until you have enough saved up to get your car repaired? That would be a bad idea, since your ability to earn income is severely diminished by not having a car. So you'd probably borrow money from a bank or your parents or someone in order to get the repairs done now and pay down the debt gradually. For that one or two months directly effected by the lost income and the cost of repairs, your budget sheet would look terrible, because you're spending way more than you're taking in. But it would be money well spent and borrowed because it would allow you to continue to earn a living.
That's a short-term deficit spike. If the deficit is being run for necessary reasons, it's actually a good thing.
On the other hand, if your grocery bill is expanding every month, faster than your income, such that at some point in the not-too-immediate but foreseeable future it will take up your whole income and more, you've got a serious problem. This is a long-term deficit. It isn't increasing or enabling your income, and while everyone needs and likes food, people need other things as well.
The problem with this analogy is that it does not suggest fiscal conservatism. What do I mean? I mean savings. If you are a contractor and need your car, you should have the foresight to know that even the finest Toyota Corolla occasionally has an accelerator pedal failure and needs repair. And so each month you put a small parcel of your gross income into an account which you hold for car repairs. Should the end of the year come and no car repairs have been necessary, then you can splurge on Christmas gifts for your loved ones.
The government, on the other hand (and this especially is true for state governments) chooses to not save. Should a budget surplus occur, and it has in the recent past, they choose to up the budget to utilize all that extra money. And then when the inevitable car repair comes up, they deficit spend because they have no saving hedged away, just their Chinese parents who are willing to give them a little cash...repaid with interest.
There is no good kind of Federal deficit spending. Suggesting that a little here or there when necessary implies that the Federal Government is simply too inept to see forward at all.
Certainly, it is a bad plan to consistently run a red budget, on that TPI and I agree. But the idea that this "contractor" can run his books at a balance and borrow whenever something comes up strikes me as safe, but in the end very irresponsible behavior, and honestly that contractor is not going to have a very successful business. If the contractor is running such a tight book that he cannot afford to repair his vehicle without borrowing, how will he repay the money he borrowed? The only way to repay it will be to stop spending somewhere else, like maybe dropping his family's dental insurance, or decreasing his car insurance to "liability only" for a while.
What hard-lined fiscal conservatives like me are suggesting is that Congressional Budget Writers should all go to a Dave Ramsey conference. Would we have still invaded Iraq (just to find the WMD's, lol) if President Bush was forced to save up for it in advance? Wasn't it high-risk borrowing that caused the economic crisis...which caused TARP...which required more borrowing? When are Americans going to grasp that you can't borrow your way out of debt?
"Maybe if I dig this hole a little deeper the hole will fill itself back up."
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