Monday, March 12, 2012

The our-grandchildren-will-have-to-pay-off-the-deficit myth

A quick post, as I'm pressed for time. I just caught the tail end of Marketplace on NPR. A commentator, a community banker from Pa. named Liz Herman (if I recall correctly), was saying, among other things, that the deficit worried her because she didn't want to stick her children and grandchildren with the bill (I'm paraphrasing).

One hears this all the time. It's nonsense. Yes, there are good reasons to reduce the deficit, especially over the long term and after what appears to be the start of a slow recovery gathers steam, but "oh noes! our grandchildren will be stuck with the bill" is not one of those reasons. As I remarked on a recent Crooked Timber thread, a government not facing a Greece-like crisis can continue to incur debt indefinitely, and as others added, this is particularly so if the economy grows faster than the government debt does. In any event, no one is going to knock on the door of Ms. Herman's grandson or granddaughter and say "pay up". This children-and-grandchildren-will-be-stuck-with-the-bill line is a myth devised by conservatives in search of catchy, understandable rationales for reducing government spending on programs they don't like. It's catchy, all right. It's also complete BS.

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