posted on Jul, 29 2004 @ 03:49 PM
Long-term deficit spending is fraught with problems, although there can be positive effects from a moderate amount of public debt (moderate being
pretty small in my book).
Ultimately, when heavy deficits mount without some responsible plan for resolving them, all sorts of trouble follows.
My preference in addressing deficits is to reduce spending. However, spending reductions must be planned and executed cautiously, lest the law of
unintended consequences beat us about the head and shoulders.
The incestuous nature of the two ruling parties, where one hand traditionally washes the other in budget negotiations, ensures that spending will
continue to grow.
At some point, the revenue base will be unable to support the level of desired spending, and deficit spending is limited as excessive debt ultimately
drives away potential creditors.
Fortunately, while catastrophe is always a possibility, there is a certain degree of robustness built in to the U.S. economy, much of which arises
from the presence of heavy foreign investments.
While that is alarming to some Americans, it should bring comfort, because no one likes to lose money. Consequently, foreign investment generally
encourages beneficial policies from foreign nations. But I digress.
The current deficit spending spree reflects negatively on both parties. Sooner or later, the trough will start to become empty.
Hopefully before then, our politicans and their greedy constituents (i.e., us) will consider a more balanced diet.
[edit on 7/29/2004 by Majic]