AAAH! It’s t he Deficit!

         The word deficit these days is synonymous with big government and finger pointing.  “We must decrease spending!” cried the rhetoric.  Are we being misled?  Is it realistic to stop spending when still in a recession? Tea Baggers are attempting to point the blame President Obama and prevent his re-election by stalling any kind of perceived recovery.  Both Republicans and Democrats have contributed to our current economy and neither is immune from blame. Making severe cuts to “entitlement programs” will not help those that are currently dependent on them.  In our current financial situation we would be removing the programs that are the life blood of those who can’t find jobs.

          Keynesian theory suggests increasing government spending to offset economic contraction.  However politicians are flag waving the deficit in an  attempt to discredit spending and strike fear into the hearts of voters.  The government needs to raise the debt ceiling and spend more on services like the Works Progress Administration of the great depression.  Once we are out of troubled economic waters, then we need to focus on balancing the budget.  We do need to resolve these wars soon though, are we really gaining anything  from remaining in Iraq or Afghanistan? Another issue that must be addressed is the Bush era tax cuts .

      Having a high deficit is not the end of the world, in the 1940s during the war the US had a deficit that was 120% of GDP.  We seemed to have come out of that OK, granted we owned a lot of Britain’s debt. Although care must be taken: After WWII the French and the British were escalating military action over control of the Suez Canal in Egypt. The US, in protest threatened to dump all of the British debt and collapse their economy. It worked to end the conflict.  The same thing could happen to the US with 47% of the public debt owned by China and Japan.  We need to buy more American bonds so that The US owns more of that public debt.  There are many more factors to our economy than the talking points that are constantly preached at us by politicians.The economy is in tough shape but it is not game ending. If the politicians can get past partisanship and attempting to mislead your votes, we can come out of this recession intact.