Friday, January 11, 2013
Why all the hoo-ha all of a sudden about dealing with long-term national debt -- especially when we're in the middle of a long and devastating recession? Europe is learning that austerity is the completely wrong approach to dealing with recession and job loss; it makes things worse, and quickly. Debt can be dealt with in time, after the immediate economic problems are addressed.
Look at it this way. Say you're laid off or your hours are cut back. You have a lot of credit card debt, you know that's an issue, but you also have to pay the rent and put food on the table. Do you choose to pay extra on your monthly credit card bill to pay down your debt, at the expense of not having enough money to buy food or pay the rent? Of course not. You deal with immediate needs now, and long-term issues when you can.
It's the same thing with the national debt. To continue to cut spending (and government-related jobs) now will only make the recession worse. Fix the economy and create more jobs now, then deal with the long-term debt.
In addition, there's a nice side benefit for fixing the economy first. As the economy improves, increased tax revenues due to greater employment helps to pay down the debt naturally. This is exactly what happened in the 1990s under President Clinton, when we were running surpluses, not deficits.
So deal with the current economy first -- spend whatever needs to be spent to create new jobs and stimulate growth. After we put people back to work and see the economy recover, then we can tackle the long-term debt problem. First things first, is what I say.
But that's just my opinion -- reasonable minds may disagree.