Comments on: Deficits and Prosperity http://acandidworld.com/2010/02/09/deficits-and-prosperity/ Democracy in America Fri, 10 Feb 2012 17:47:56 +0000 hourly 1 http://wordpress.com/ By: ErikaF http://acandidworld.com/2010/02/09/deficits-and-prosperity/#comment-17393 Wed, 10 Feb 2010 16:55:25 +0000 http://acandidworld.com/?p=11212#comment-17393 The deficit-screamers seem to have basic misconceptions about gov’t and deficits. The gov’t is not, and cannot, be run like personal finances or a small business (where deficits are an immediate worry), or even a global business (the business must make money to be valuable). Rather the gov’t is more akin to non-profit enterprise that most of the country uses. As such, a deficit (within reason) is not a huge concern. The deficit as it is now, of course, is a large concern, and must be dealt with in the close future.

Unlike businesses, which invest in people and infrastructure in the upturns, gov’t must invest in the downturns. Gov’t must spend money to shore up the consumers/contributors (that’s the general public) so that the contributors can continue to provide funds to the gov’t. If folks cannot find jobs, they cannot send money to the gov’t, which means that the gov’t will not have money (even with the deficit) to send back in terms of benefits and infrastructure spending.

It’s a situation that’s opposite from normal business behavior. Simply put, the gov’t must extend its credit for the short-term to build up the base so that later, long-term, the spending and credit can be curtailed and the deficit reduced.

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