The other night I said to myself, “I haven’t checked Bruce Barlett’s web pages in awhile.” Sure enough, he’s got a good piece on deficit reduction and infrastructure investment in the NY Times. I’ll quote it at length here:
Much of the motivation for deficit reduction, a goal shared by policy makers across the political spectrum, is the belief that deficits consume the nation’s seed corn. That is, deficits represent negative saving. Because saving is presumed to be the key determinant of long-term real economic growth, deficits deplete the supply of saving and thus reduce growth.
There are many problems with this analysis. Continue reading