Air America President Dismisses Deficit Spending as 'Rhetoric'
That much money may be difficult to comprehend, but former President Ronald Reagan put it in perspective with a 1981 analogy describing the federal debt: âAnd the best I could come up with is that if you had a stack of thousand-dollar bills in your hand only 4 inches high, youâd be a millionaire. A trillion dollars would be a stack of thousand-dollar bills 67 miles high.â
But the huge number doesnât worry Mark Green, the president of the liberal talk radio network Air
âLetâs get where we at least agree,â Green said. âOne last thing, the conservative rhetoric about, âWe donât want to spend too much and the deficitâ is real, itâs politically real. And Sen. and President-elect Obama responded today when he said we have to eventually balance the budget.â
âAnd, Franklin Roosevelt as a candidate said in
But deficits do matter and downplaying them is risky business. As MSNBC âHardballâ fill-in host David Shuster pointed out, it puts the
âWell, at a certain point, though, I think we do get in trouble either with the Saudis or Chinese when they decide theyâve had enough,â Shuster said.
High deficit spending by the government also causes higher interest rates â the very thing the government is fighting as it tries to unfreeze credit, as William Gale, director of economic studies at the left-of-center Brookings Institution, pointed out in an article by John Maggs for National Journal on Nov. 3.
âDeficits cause higher interest rates because the government competes with businesses and consumers to borrow money, according to conventional economic theory,â Maggs wrote. âThe science of quantifying this effect is a little slippery, but Gale's research estimated that for each percentage point of GDP that the deficit rises, long-term interest rates increase by 0.4 to 0.7 percentage points. According to this yardstick, for the decade of higher deficits that lasted until 1993, government borrowing raised interest rates as much as 1 percentage point each year. Compounded over 10 years, this borrowing crowded out a lot of growth.â