First, the deficit is an almost meaningless measure of the federal budget. No corporation would be allowed to account for its gains and losses the way the federal government does, which is simply cash out minus cash in. That would have many strong, profitable companies that borrow to invest reporting deficits every year. This deficit accounting ignores the extremely important difference between buying an apple and buying a bridge: The bridge will provide value for many years after the apple has been eaten.
Are we alarmed when a family with an annual income of $100,000 borrows $150,000 to purchase a $200,000 house? The pseudo-logic of the deficit debate says we should be concerned, because the family is spending more than twice its annual income on the house alone. But actual logic says there is nothing wrong with borrowing to finance the purchase of a durable good that will generate benefits for many years to come.
In addition, politicians' deficit concerns are obviously political. History shows that deficit hawks tend to shed their feathers whenever their own party takes over the White House. That irresponsible deficit they were complaining about last year? That was the other party's irresponsible deficit. Their deficit is different because it allows them to do things that need to be done.
Of course, we should be concerned about deficits when we can't finance them at reasonable interest rates. But this is not such a time. Today's federal government can borrow at the lowest rates since the 1950s.
