Stop Worrying About Budget Deficits
Ten years ago, the United States was clawing its way out of a miserable recession. Washington was running an annual deficit of $1.3 trillion, and the national debt had reached $9 trillion, roughly 60 percent of GDP. Those figures were frightening enough to spur the Obama White House and Congress to create a panel of experts to address the long-term budget and to kick-start several rounds of government austerity, making cuts to the defense budget and a wide range of domestic programs.
Today, the country is clawing its way out of another miserable recession. Washington is running an annual deficit of $3.1 trillion, and the national debt has reached $21 trillion, more than 100 percent of GDP. Yet even as some Republicans are beginning to warn of the need for belt-tightening in the coming years, Congress is considering another large stimulus on a bipartisan basis, Democrats are vowing not to allow President Donald Trump’s deficits to squeeze out their own priorities, and few if any are warning about the wrath of the bond market and death by red ink.
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A quiet revolution is happening in economists’ understanding of deficits and debts, with Democrats abandoning many of their concerns about long-term spending pressures and Republicans clinging to a queasy yes-for-us, no-for-you position on deficit spending. That revolution is a complicated one, driven by falling interest rates and by the changes to demographics, private saving, corporate behavior, monetary policy, and global investment flows behind them. But fiscal responsibility means something different today: Stop worrying and learn to love red ink.
https://www.theatlantic.com/ideas/archive/2020/12/fiscal-responsibility-doesnt-mean-what-it-used-to/617365/?utm_source=newsletter&utm_medium=email&utm_campaign=atlantic-weekly-newsletter&utm_content=20201213&silverid-ref=NjkxMTEyNzA0ODk2S0
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