repost of mine if anyone cares: yes, its bad for the economy and yes its bad overall but basically people who use deficit and bush in the same sentence really know very little if at all about it. Its obvious if you ask someone, they will post a site like red...keeps them from trying to make up something...not saying red doesnt know anything about it, but even economists cant give you a straight answer usually. I have a minor in econ...not that it means i know anymore than the rest cuz basically I still know little how the deficit works or doesnt work but here's my brief knowledge: First, the deficit is bad because it gives foreign governments more control here due to having to sell more bonds internationally to make up for it. Second, the capital the government borrows, which in effect is what the deficit is, takes away from the little guy, namely the private sector. there is only so much of the pie to be divided. Last and not least, a continual increasing deficit forces the government to be plagued with increasing interest payments annually and it starts to snoball similarly to if you got behind on 10 credit cards at 25%. Although, the deficit is not inherently bad if cyclical, it is bad if continual and permanent. Obviously the fed gov has to increase spending/reduce taxes during recessions to stimulate growth....most everyone understands this. The real problem is the size of the federal government yet everyone uses the deficit as the big issue. its not. the deficit comes and goes as does highs and lows in the economy. As far as the deficit being a major political issue, its a load of crap like most of their so-called issues but it sounds good b/c politicians have been using it as a red-herring plus it makes people sound smart when they make it an issue. They know no one can debate them since no one truly understands it. http://www.tigerforums.com/showthread.php?t=18286
In an economic system, like most natural systems, balance is the key to success. An equilibrium between spending and income is a cornerstone for a sound, long-term economic policy. Tirk is quite right in that deficits can be natural fluctuations along the curve. But 47 of the last 55 budgets in this country were deficit budgets. A natural fluctuation would produce more surplus years than we have had. Our politicians promise and spend plenty. Much more than they have the political balls to raise enough taxes to pay for. The record deficit budgets of the Bush II administration are out of control. We are talking about a whole new scale of problem here. The National Deficit is today 7.4 Trillion dollars and we will add another $700 Billion this year. In FY04 the U. S. Government spent $322 Billion of your money on interest payments to the holders of the National Debt. Compare that to NASA at $15 Billion, Education at $61 Billion, and Department of Transportation at $56 Billion. US Treasury Dept. - National debt to the penny
So, if George's spending and deficit are so bad. What is Kerry going to do to turn that around? Last I heard, he wanted more money for the troops in Iraq, more money for the education system, more money for people in "socio-economic distress".
still, nobody has told me why i should care if the government is in debt, as long as my taxes are low, why do i care? it is just sort of assumed that debt is bad. why? i dont care. dont tax me too much, thats all i care about.
Because the higher the debt, the more money going to pay off the debt - and the less money being spent on things like military and education.
then what happened to the money that was borrowed, that wasnt spent on the military or education? if i borrow money to buy a house, sure, i am in debt, but i also have a house. besides, i dont care very much about spending on education. less taxes means more money to send your kids to private schools.
It's because the interest rates snowball. Having debt is fine as long as you keep it under control, but the higher the debt gets - the higher the interest payments get. And I think that free public education is what makes America what it is today. Without it, how many kids brought up poor could have ever learned to read and write and make something of themselves. A free-market economy needs to be kept in check with what's best for society too. If you don't want the government spending money on stuff at all, then you definantly shouldn't want a deficit. You're tax money is being spent to pay for it.
you are right about public schools, you caught me playing devil's advocate there. lets say we need a new bridge for our town. and as a collective we borrow and build the bridge. then, because we have the bridge sooner rather than later, our economy grows. then we are in debt, but so what, our economy is growing at a rate it would not have, if we hadnt built the bridge. so in the future, debt means less to us than it does in the present. and it is virtually always true that future generations are alot richer than present generations. so i dont see why we cant drive ourselves deeply in debt. its not like x amount of debt is as crippling to future generations as it is to us. we are so much richer than generations of the past. we have material goods our granparents couldnt. we have much more capital than previous generations, so debt for people of the future matters less and less. maybe we should borrow as much our credit will allow. doesnt the overspending of the present help us? and isnt it true that every generation is richer than their parents, so we should be happy to let them pay our tab? in fact isnt it because of all our investments that they get to be rich? its not like a pie and every piece we take out must be replaced. the pie itself gets bigger, so the pieces we took in the past are relatively smaller and easier to replace in the future. again i mention this article: http://slate.msn.com/id/2036/
