Sometimes, when life hardly seems worth living, I almost wish I were an economist. I am not often so depressed. There is a reason: one of our political slogans is driving me nuts. It goes something like this: "If we managed our personal budgets the way the government does, we would go broke." Or, "Anyone who has ever had to pay bills knows that you cannot spend more than you take in". That kind of thing.
The fact is that personal household budgeting is not like a governmental budget. Period! It is not the same thing, writ large!
Personal budgets, and for that matter, State budgets, too, have to be balanced, if not in the short run, certainly in the slightly longer run. Here in Minnesota, for instance, the State is allowed to be out of balance for a couple of years, but it has to pony up before the next couple of years has ended.
The major difference is that the federal government creates the currency that all of us use to pay our bills. It can print money. There is a consequence for increasing the money supply, or course, but it is not so simple as balancing credits and debits.
In a time of economic crisis, such as we have been going through, strictly balancing the federal budget produces precisely the situation we do not want. If the government spends less, and generates the income to pay the bills it has to pay, the economy slows down. More people lose their jobs. The demands on social services grow. Investment slows down. Everybody gets super-cautious. If we really demanded a balanced budget in a time of crisis, we would have to lay off police and fire department personnel, cut back on social security, tell the military to get used to much more limited resources, lay off teachers, place road and bridge projects on hold, and so on.
What is needed, right now, is not a frugal government, but one that puts people to work, that invests in long-term development, makes it easier for people to get an education, that provides people with emergency income, and health care; that, in all, reverses what would happen if government got cautious and stopped spending what it did not have. We had no hesitation in doing that during World War II, when we ran up massive deficits. We grew out of the depression that preceded it.
I propose a different slogan, instead: not that all budgets are alike, but that a slogan is just a slogan. Slogans are shorthand for covering up thoughtless proposals.
Right now, private investment is not putting people back to work. The work we need to have done is precisely the investment that governments make: health care, education, infrastructure, public amenities and services, secure retirement plans, and world-class information capabilities.
The budget will be balanced when we get back to work, not by starving it, but by designing and investing in a robust society.
The fact is that personal household budgeting is not like a governmental budget. Period! It is not the same thing, writ large!
Personal budgets, and for that matter, State budgets, too, have to be balanced, if not in the short run, certainly in the slightly longer run. Here in Minnesota, for instance, the State is allowed to be out of balance for a couple of years, but it has to pony up before the next couple of years has ended.
The major difference is that the federal government creates the currency that all of us use to pay our bills. It can print money. There is a consequence for increasing the money supply, or course, but it is not so simple as balancing credits and debits.
In a time of economic crisis, such as we have been going through, strictly balancing the federal budget produces precisely the situation we do not want. If the government spends less, and generates the income to pay the bills it has to pay, the economy slows down. More people lose their jobs. The demands on social services grow. Investment slows down. Everybody gets super-cautious. If we really demanded a balanced budget in a time of crisis, we would have to lay off police and fire department personnel, cut back on social security, tell the military to get used to much more limited resources, lay off teachers, place road and bridge projects on hold, and so on.
What is needed, right now, is not a frugal government, but one that puts people to work, that invests in long-term development, makes it easier for people to get an education, that provides people with emergency income, and health care; that, in all, reverses what would happen if government got cautious and stopped spending what it did not have. We had no hesitation in doing that during World War II, when we ran up massive deficits. We grew out of the depression that preceded it.
I propose a different slogan, instead: not that all budgets are alike, but that a slogan is just a slogan. Slogans are shorthand for covering up thoughtless proposals.
Right now, private investment is not putting people back to work. The work we need to have done is precisely the investment that governments make: health care, education, infrastructure, public amenities and services, secure retirement plans, and world-class information capabilities.
The budget will be balanced when we get back to work, not by starving it, but by designing and investing in a robust society.
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