To William Galston, Jason Furman, Christina Romer, Stephanie Kelton, and countless other Left-wing economic eminences, the easy solution to slow growth is deficit spending. Looking back to Barack Obama’s presidency, his economic advisers were said to have had “Rooseveltian fantasies” dancing in their heads as they rhapsodized about job creation care of the federal government. Romer in particular squealed with delight at how $100 billion of borrowed money could create 1 million jobs at $100,000 per . In Romer’s words, “A million people is a lot of people.” You can’t make this up! To members of the Left, the answer to slow economic growth is always and everywhere borrowing and spending. This was true in 2009 after Obama was inaugurated, and it’s the expressed view in 2021 with Biden in the White House. But the thinking isn’t credible... To see why, consider yet again why conservative alarm about deficits is so wrongheaded. it’s backed by the most dynamic economy in the world. Russia’s capacity to borrow is highly limited precisely because its economic prowess in no way resembles that of America. Translated for those who need it, the United States can borrow in size because
BULLISH BORROWING On the other hand, much of the alarmism about debt and deficits is rooted in simplistic thinking... This should be properly viewed as a rejection of all the handwringing on the American Right about deficits and debt, and how they signal “doom” (Mark Steyn) for the United States. More realistically, they signal powerful investor optimism about the U.S.’s economic future. Translated for those who need it, the United States can borrow in size because it’s backed by the most dynamic economy in the world. Russia’s capacity to borrow is highly limited precisely because its economic prowess in no way resembles that of America. Put another way, an inability to borrow is the truly bearish market signal. So while members of the Right well overdo it when they embrace hysterical rhetoric about federal borrowing that foretells “crisis,” their reliably confused opponents on the Left hardly elevate the discussion. Though the piling on of debt isn’t the perilous indicator that conservatives claim it to be, it’s most certainly not the driver of economic growth that Lefties naively claim. Along those lines, rare is the op-ed by New York Times columnist Paul Krugman that doesn’t include some call to increase U.S. deficits as a way of boosting the economy. As he observed in a column from 2020, “The only thing we have to fear from deficits is deficit fear itself.” The Princeton economist’s point was that “we can and should spend whatever it takes” whenever the U.S. economy is limping. He’s not alone in his thinking...
American Consequences
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