Budget Deficits? I Say Bring ' Em On For My Generation


It's time for a reality check on the Federal budget deficit. Deficits are good, great even. But our generation is constantly used by the budget-balancers as a reason for why the government shouldn’t borrow.

Enough already. If I hear one more politician talk about the government borrowing money as "passing the buck on to our children" or "leaving our children saddled with debt," I think I'm going to be sick. Stop using my group as ammunition to promote your anti-deficit ideology.

The standard position in American politics is to act like the government running a deficit is bad, and especially bad for the younger generation because, after all, "we're the ones who are going to have to pay it back." What complete garbage. Economists almost universally agree that deficit spending is the right thing to do in a recession, but somehow that doesn’t filter through to the candidates’ talking points.

The budget deficit is fabulous, especially for the under 30 cohort. You should love the deficit, absolutely adore it, even want to take it home with you and possibly introduce it to your parents.

Why is the deficit good? People like to use analogies to talk about politics, and when it comes to the deficit they use the wrong one. The deficit's bad if you think of the U.S. government as a household. It would be terrible if, when your parents died, you inherited all the debt that they'd run up by living irresponsibly. But what if we think of the U.S. Government as a business instead?

Businesses borrow money all the time in order to grow. Nobody thinks that's a bad thing as long as the company is run semi-competently. Forget the question of competence for a second since we're talking about the Feds after all. Our government can borrow at lower interest rates than any other institution on earth. And if it spends that money on things that help the economy grow, like, say, a $700 billion rescue package for the financial sector, or just plain old infrastructure projects, then the money is worth borrowing. If we keep going with the business analogy, wouldn’t you rather inherit shares of a company that had borrowed in order to fuel its growth than inherit shares in a no-growth business that’s sat still for decades because it didn’t want to borrow?

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Why is this more important for young people? Because, personally, I don’t really want to come of age during a brutal, prolonged recession, and that is exactly what we’re going to get if we don’t see even more Federal deficit spending. Don’t worry about the government borrowing another $150 billion for the stimulus package they’re kicking around in Congress That borrowed money means more economic growth, more jobs, and for that reason it ultimately pays for itself.

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What we need to worry about are the Herbert Hoover types (actually this is unfair to Hoover, who tried deficit spending but on too small a scale) who use our generation as an excuse to claim we need to balance the budget, when in fact we need to juice the economy. If we’re going to head into a severe, multi-year recession, don’t let it be because the politicians didn’t want to leave our generation “saddled with debt.” I’ll take debt over a crappy economy any day of the week.

Questions? Comments? Send them to millennialmoney@cnbc.com