Thursday, February 12, 2009

In Defense of Deficit Spending

I’ve always been leery of debt, whether it be personal debt or deficit spending by the government. But looking at history, most of what this country has achieved has been with some form of deferred payment, i.e., deficit spending.

The government has run a deficit of varying sizes under every president since Herbert Hoover, save three: Harry Truman, Lyndon Johnson, and Bill Clinton.

Most recently, following spiraling deficits incurred under Ronald Reagan, Bill Clinton got the budget under control, and the deficit became a surplus in 1998. But that was mainly because the economy was so strong that the Federal government received tax revenues far beyond expectations. Surpluses and balanced budgets are for times of prosperity, not for rainy days, and we are enduring a profoundly rainy day.

The fact of the matter is that public debt has been a necessary evil for generations, and much good has come from the projects that brought on the debt. At a time when 90% of rural residents had no electricity, the Tennessee Valley Authority brought affordable power to millions of residents. How many of them would have preferred to live in the dark until we could pay for the TVA with cash up front? Would commuters of the last three generations been willing to do without the Interstate Highway System? Or the Golden Gate Bridge? These were not “make work” projects but improvements that needed to be done. Lest one think deficit financing is a new principle, Abraham Lincoln himself greatly increased the debt pushing for the Trans-Continental Railroad, the track-mileage of which was doubled between 1860 and 1870, and Lincoln was an enthusiastic opponent of “internal improvements.”

Today, much of the infrastructure, from roads and bridges, to water mains and sewers, to schools and public buildings, are crumbling from neglect while the nation turned its attention elsewhere. They need to be repaired or replaced.

Later generations reaped the rewards of projects and progress begun by their ancestors, and future generations will benefit from the improvements we make today. Why shouldn’t they help pay for it?

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