1hundredsixty8

My friend Jack wants me to loan him $100. He claims he will pay me back the $100 with $20 in interest. Problem is, I don't have the hundred bucks. However, my sister will lend me the $100 and will do so for an interest charge of only 5 dollars. So, if I go $100 in debt, I have the opportunity to make $15. Not bad.

Recently, Congressional Republicans have been reiterating one of their favorite talking points- their desire for a balanced Federal budget and, even better, a Constitutional amendment to force the government to always pass balanced budgets. For the past week, they have not missed an opportunity to remind us that Paul Ryan's budget will get to balance  in 10 years. They point out that the Democratic alternative, authored by Senator Patty Murray, never gets to balance. The balanced budget meme plays well with a public where the majority are very concerned about their own personal fnancial situations and their ability to pay their own bills.

I wish I had the opportunity to tell these deficit hawks about my friend Jack, and about my sister, and how I could, by going into debt, make some money. I have written in the past about how the deficit and the national debt are scary-sounding issues. Fiscal paranoia makes it is easy to ignore reason. A consequence of this GOP happy-talk is to make budget balance seem desirable, which in and of itself, it is not. Case in point: Mitt Romney and his cronies became fabulously wealthy through the skillful use of debt. As Josh Barro (@jbarro) tweeted earlier today, "What we need is a sustainable budget deficit (perhaps 2% of GDP), not a balanced budget."

Fact: GDP has quadrupled over the last 50 years. The Federal government ran deficit budgets 46 of those 50 years. 

Look at it this way: If deficits are 2% of GDP, interest rates remain at historic lows (as the Federal Reserve projects), and GDP grows at a rate close to 3% (also historically low by recent post-recessions standards), we would be foolish not to run a deficit. The only thing standing is the way of easy money (meaning economic growth) is the Congress.

Excuse me: I have to make two phone calls, first to my sister and then to Jack.