During the last week or so, Neil H. Buchanan has written some great essays for FindLaw’s Writ and Dorf on Law to address “the public’s perverse and misinformed attitudes about federal deficit spending.” I recommend that you read all of them in full, but here are some excerpts to get you interested.
From the first essay:
Once we understand the basics of deficit finance and the alternatives that we currently face, it becomes clear that the President need not apologize for the size of the deficit. If anything, we should be happy that he has thus far mostly ignored the “deficit hawks” (both in his own party and among the opposition), and we should support him if he decides that it is necessary to inject more stimulus into the economy later this year or next.
From the second essay:
My support for deficits during downturns is essentially rooted in my belief that deficit spending will create economic activity that would not otherwise have occurred and that the additional federal debt incurred in the process does not create harms that outweigh the short-run benefits.
Therefore, if there were evidence that deficits during recessions do not result in increased economic activity, then that would be a reason to oppose deficits. This can only happen, however, if the deficits are incurred by giving money to institutions or people who will not use the money to produce things or to hire people. This means that deficits are a bad idea if they are spent on people or things that do not add to economic activity.
From the third essay:
Unlike people (but like businesses), governments have no expected date of death, meaning that there is no need to wind down debt in anticipation of retirement. More importantly, governments can operate under longer time horizons that allow them to engage in investments that might pay off in decades rather than during the next quarter or fiscal year, and they can make those investments without worrying (as businesses must) about preventing the benefits that will flow from their investments from being enjoyed by other members of society.
Thus, for example, while businesses and families certainly understand that they will be better off if everyone has a minimum level of education, private actors must use the government to overcome group action problems and other barriers to investing in mutually beneficial projects. Basic research in the arts and sciences, public health initiatives, transportation improvements, etc. all fall into this category.
From the fourth essay:
[I]f we force ourselves only to engage in those long-term investments that we can currently finance, we will surely end up financing many fewer such investments. I would prefer not to tell our grandchildren that we passed up profitable investments because we could not pay for them up front, when financing would have been available. Their patience with our explanations that we were just being prudent will surely be limited. As well it should.
Professor Buchanan is both a lawyer and the holder of a B.A., an M.A., and a Ph.D. in economics, not some wag on cable news, so you should read his essays carefully. Enjoy.