Greg Sargent talks about how the Beltway Deficit Feedback Loop crowds out attention to unemployment. He’s right! But that’s not all it does. Jared Bernstein had a great item yesterday about how deficit mania also crowds out infrastructure.
This is all pretty simple stuff, and it’s all completely obscured by budget politics. You hear about the United States being “broke” in budget terms, but that’s nonsense; the federal budget deficit just doesn’t have didly to do with whether the United States is rich or poor. But whether the US has first-rate roads, tornado warning systems, and schools has plenty to do with whether it is ultimately rich or poor. It doesn’t always make sense to use public money to buy those things, but it often does; it doesn’t always make sense to borrow in order to buy them, but sometimes it does. Presumably, everyone who has ever run a business knows that it’s sometimes a very good idea to borrow money to invest in new production capacity, or new stores, or sprucing up an old building. The same applies (although not in quite the same way) to governments.
It is true that liberals have been known to be sloppy with the rhetoric of investment, and it’s also true that not all (real) investments are worth the money. But the basic idea that governments can make sound investments that really help the nation down the road is perfectly sound.