These Are the Days of Miracle and Wonder...
Claims That America Needs Not More Stimulus, But Fiscal and Monetary Retrenchment

Barack Obama's Claim That the Federal Budget Is Usefully Analogized to a Family Budget: For the Virtual Green Room

Rebutted by Jared Bernstein:

Here’s the gist: “The federal budget is just like a family budget, and we in government must tight our belts and live within our means just like families do.”... [I]t’s almost always used as an argument for cutting everything to the bone right away, and... it’s wrong.

First of all, it’s bass-akwards: when families are tightening their belts, the federal government is the one institution that can actually help the economy—and these belt-tightening families—by loosening its belt and running a deficit. That deficit should be temporary and should come down when the private economy climbs up off the mat....

But there’s another fundamental way in which this family budget analogy gets misused.  Families borrow to make investments and to get over rough patches.  They run deficits too.  I went into pretty deep debt to finance college and grad school and I’m glad I did. The whole credit system is based on the fact that if we had to pay cash-as-we-go for everything, we’d seriously underinvest.  And that’s true for families and governments—and yes, you can overdo the borrowing thing.  But to flip too far the other way is equally dangerous.

So... discount those who want to use it as a hammer to insist on instant cuts.

This has been yet another quick response to an erroneous--or a misleading, or a mendacious, or a flat-out cynical lie--talking point circulating in America's crippled civil society public sphere.

Comments