On Debt and Deficit: Part II

In Part I I laid out some of the basic facts about our national debt and deficit. In Part II, we look at some of the thinking around these issues. 

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There seems to be great relief with the latest CBO projections that the deficit (now projected at $600 billion) is falling quickly. It is such as it ever was: deficits rise with recessions and fall with recoveries. But the deficits never "fall" enough during recoveries (into surplus) to make up for the deficits that accumulated during recessions. And so, we find ourselves $17 trillion in debt.

Further, there seems to be a ratcheting effect: over time the deficits that arise during recessions get larger and larger, while there are hardly any surpluses to speak of, so that the debt grows at an accelerating rate. 

Discussing the deficit seems to be like discussing global warming: The data is murky, the analyses endless, the opinions cover the spectrum and no one really understands the issues. Nonetheless, many in our country believe that the weight of the evidence favors the conclusion that global warming is both real and man-made, and further, that our one and only planet isn't worth taking chances with. Regarding the deficit, many have come to the opposite conclusion: They believe there is no harm from deficit spending and don't seem to be concerned that there might be a point of no return. 

It is a paradox, but I think one that can be explained. Ignoring the deficit is "easier" in that it forestalls the tough decisions that would have to be made to eliminate the deficit; further, backing away from these decisions allows our pols to keep greasing the creaky wheels of government with pork. By contrast, the costs of dealing with global warming seem, to the average individual, to be indirect and borne by others, even though there may be an intellectual understanding that at some point, the costs will be at least partly passed on to consumers.

The net result is that very few people are motivated to look at the facts and fewer yet to deal with the issue -- even though it may be easier to fix than many think.

In Part III, we'll look at the reasons the debt has to be addressed.
In Part IV, I'll present a solution.