Schooled on Deficits

Stan Collender, a colleague of Bruce Bartlett over at Capital Gains and Games, writes a fantastic response to Peggy Noonan, who wrote this in the Wall Street Journal:

People are freshly aware and concerned about the real-world implications of a $1.6 trillion dollar deficit..."

Here is Collender's money quote:

Has anyone ever told you that you have to consider the economic context in which a deficit occurs? A deficit even half that size when the economy was growing, like the ones that happened during Bush 43, were indeed a disaster. But last year's deficit of $1.4 trillion, which occurred when monetary policy was having no effect and when businesses and consumers weren't spending, not only was the correct fiscal policy, it was a triumph. The same will be true this year if the deficit is $1.6 trillion.

In other words, Bush's not reducing the deficit when the economy was strong was the problem, and Obama's adding to the deficit when spending and economic growth were nonexistent was the solution to the problem. And if anyone with a brain takes the time to look around, they will see signs that recovery is happening. Steps are underway to address long term deficits, including tax increases and spending cuts.

I know it's hard to see the light at the end of the tunnel. But since I'm on the front line of an industry that is central to the U.S. economy -- mortgages -- I get to see people who have savings, incomes, secure jobs, and an enthusiasm that things will get better from here. I am busy at my job; and I'm getting busier. This is good news for all of us. So, instead of bashing the president for running up deficits, we should be cheering that many of us are working and will be working again soon. When times are good, that's the time to cry about deficits.