WashPost
Wednesday, February 17, 2010;
As a debt worrywart who devoured one of Pete Peterson's doomsday books on my (first) honeymoon, and who came to Washington to help balance the budget in the 1990s, I take a back seat to no one when it comes to deficit hawkery. But the current panic over the national debt is a little mad. Yes, it's a fine thing that President Obama is naming Alan Simpson and Erskine Bowles to head up the fiscal commission he'll unveil Thursday. And Republican glee and Democratic fear over the political fallout from trillion-dollar deficits are understandable. But, at least for now, the policy consequences are modest and manageable.
How can I say that? Because even the most debilitating debt is racked up only one year at a time. And that means the staggering $9 trillion in fresh debt that President Obama has projected over the next decade is only a number on paper for the moment. If they came to pass, these levels of debt would be country-wrecking, next-generation-crushing and downright wrong. Is the president's forecast of such debt proof of the White House's unwillingness to lead on hard choices? You betcha. Does it mean we'll actually incur this debt? In a word, no.
The beginning of wisdom here is to remember that what "everyone knows" about the economy often turns out to be wrong. I was an aide in the room when respected economists on Bill Clinton's team told the president in 1994 (as has been reported elsewhere) that he couldn't possibly seek to balance the budget any faster than in seven to 10 years. Reducing government demand more swiftly might capsize the economy! Three years later, the budget was in surplus and the economy was humming. The moral: Always balance the advice of experts with the counsel of common sense.
Common sense today starts with the fact that the economy is recovering from the worst downturn in decades. With unemployment high, and business investment and consumer spending still lagging, government has to run big deficits to keep the recovery on track. Once we're on stabler ground, and seeing ample job growth again, deficits on this scale won't be justified. For now, as Obama rightly argued in a speech Wednesday marking the first anniversary of the stimulus bill, they're unavoidable -- and indispensable.
(More here.)
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