As most of the people in the US aren't a.) economists or b.) freakishly addicted to political news, it's very understandable that they don't have a very clear idea of what the deficit is or how it works. As such, they often analogize the goverment's finances to their family finances, which seems like it would work but doesn't.
In tough economic times oftentimes your hours or salary is cut or you don't get a bonus (in other words, your revenues are down). When your revenues are down (particularly if it's unclear when or if they'll go back up), it makes sense that you would then want to spend less. Ultimately you want your spending to be equal to your revenues (a balanced household budget) or lower than your revenue (running a surplus). If you're spending more than you bring in (running a deficit) - you're probably running up your credit card, which for families is a bad idea in rough economic times.
On a macro level, however, this doesn't work. When you have bad economic times and high unemployment, the government's revenues go down (because fewer people are paying income taxes). However, this is precisely the wrong time for the government to try to limit its spending. That's because bad economic times and high unemployment are caused by (or at least prolonged by) decreases in demand - people are out of work, so they're not buying stuff, so the people who would have made that stuff are also out of work, and can't buy stuff, etc. etc. The government, which can borrow lots of money easily and at a really low interest rate, can step in at this point and replace that lost demand - buying goods and services from people who would otherwise be out of work.
And, if the government does it right, it gets more than a dollar's worth of economic bang for each dollar spent. For example, during this recession, a contractor and his team may be out of work because houses aren't being built. Say the government hires the contractor to build a school, and pays $1,000,000. That million dollars goes first to the contractor and his or her workers as wages, and also to other companies that supply materials. Then the contractor and his team (who otherwise would have no money to spend, were the unemployed) take their wages and spend them in local stores- the stores (which now have more business) may hire more people. That's the theory behind stimulus spending, but the government has to run a deficit in order to do it, because during a recession its own revenues go down.
People (and politicians) like to talk about "the government tightening its belt," but forget that "the government" isn't like a person or a family. When the government cuts back, it's not doing it by cutting the pay of politicians (the people that make up the government) or by having the president use Air Force One a little less. The government "tightens its belt" by cutting programs - typically things like giving less money to states to spend on teachers (which means teachers get laid off) or cutting Medicare reimbursements (which means that seniors lose medical coverage) or cutting unemployment benefits (so laid-off workers lose their benefits sooner). Even when the government cuts programs that seem "extra" or "frivolous" like NASA or aid to the arts or whatever, that means that actual people get laid off and are added to the unemployment rolls. That means that those former government workers now dont' have money to buy things at their neighborhood stores. If, during a recession, the government tried (like a family would) to not run a deficit, it would mean laying off tens or hundreds of thousands of government employees, and cutting programs that help the unemployed and other victims of recession.
Short-term deficit spending during a recession makes sense - it saves jobs, creates jobs directly (the people hired by the govt to do things) and it spurs on private-sector job creation. It helps dig countries out of recessions - and then when things are good, and people are paying taxes again, government revenue rises (and spending on things like unemployment benefits decreases) and things tend to balance out.
By comparison, long-term structural deficits are much more worrisome. These occur with programs like Medicare where you can project that future costs will be much higher than future revenue. To draw an analogy to family spending, a short-term deficit is like using your credit card one time to pay for moving expenses when you move to a new city for a new job - for that month, your expenses are higher than your revenue, but you can pay it off over time. Structural deficits would be like if you made $3000/month, and bought a house with a $3500/month mortgage.
Obama's stimulus spending is short-term deficit spending - a one time shot of money into the economy, which hopefully can be repaid when the recession ends. People are unnecessarily freaked out about it. However, what's being ignored are the huge structural deficits we face in the future (which the healthcare reform bill would help to solve).
What we really need to worry about are long-term, structural deficits that come from entitlement programs like Medicare - where you can project in the future that the costs of the program will definitely exceed their income. That's what we need to worry about
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