Re: Deficits
Posted: Thu Feb 15, 2018 9:49 am
I like Appleman's sensibilities here - and Jim's point about military spending is part of what is most alarming about about the current budget to me.
Government debt is too high, and needs to be dealt with rationally - and in consideration of the health of the economy.
I'm not against government deficit spending categorically, but I think it should the exception rather than the rule - and only used in times of economic trouble. In other words, I think the government should attempt get out of the way and run bit of a surplus during stable economic times (e.g. when growth is steady and unemployment is low - like now), benefiting from the stronger income to pay down its debt. Then it should reserve deficit spending for stimulus (preferably infrastructure) during times of economic crisis (e.g. low growth, high unemployment). The government, as large as it is, doesn't spend enough to drive the economy, but there is evidence that well-placed stimulus (along with proactive monetary policy - see below) can nudge the economy toward renewed growth.
Ah...but rationality is not necessarily baked into the democratic system is it?
I think the same goes for Federal Reserve monetary policy BTW. During times of plenty (like now), the FED should gradually raise interest rates and tighten monetary policy to manage stable growth & inflation control, and to "bankroll" the ability to lower interest rates and ease policy during times of want - to encourage investment and growth. Frankly, the FED seems quite a bit more rational to me than congress right now.
Government debt is too high, and needs to be dealt with rationally - and in consideration of the health of the economy.
I'm not against government deficit spending categorically, but I think it should the exception rather than the rule - and only used in times of economic trouble. In other words, I think the government should attempt get out of the way and run bit of a surplus during stable economic times (e.g. when growth is steady and unemployment is low - like now), benefiting from the stronger income to pay down its debt. Then it should reserve deficit spending for stimulus (preferably infrastructure) during times of economic crisis (e.g. low growth, high unemployment). The government, as large as it is, doesn't spend enough to drive the economy, but there is evidence that well-placed stimulus (along with proactive monetary policy - see below) can nudge the economy toward renewed growth.
Ah...but rationality is not necessarily baked into the democratic system is it?
I think the same goes for Federal Reserve monetary policy BTW. During times of plenty (like now), the FED should gradually raise interest rates and tighten monetary policy to manage stable growth & inflation control, and to "bankroll" the ability to lower interest rates and ease policy during times of want - to encourage investment and growth. Frankly, the FED seems quite a bit more rational to me than congress right now.