Commenter increasingmu writes on my post about Peter Boettke, Keynesianism, and public debt that: "[L]ike the 19th century, we need to be continually running surpluses when we aren't under extreme duress."
Why? You can't just say something like this, you have to have a reason. Why do people think this? If this is really something we "need" then why have so many countries been doing exactly the opposite and doing fine?
It seems to me the only thing that's obvious is that our debt burden can't grow faster than GDP on a permanent basis (if social welfare is growing even faster than GDP we actually probably could grow the debt burden faster than GDP without suffering welfare losses, but let's keep this simple). So the question is, what is required for that to happen. "Continually running surpluses when we aren't under extreme duress"? Nope. That's not required. The only thing that's required is that the growth of the debt is slower than the growth of GDP - not that it's negative (i.e. - a budget surplus).
So if your goal is a stable or even a decreasing debt burden there is exactly zero justification for the claim that this is something that "we need".
So why? Why are these claims made? I don't understand and I still don't feel like I have answers. Another commenter says that taxes may increase. It doesn't seem like they need to. Borrow money to pay the interest, and shave that amount off the top of the non-debt-burden-increasing deficit threshhold. A doctrine that we must run surpluses is just as likely to raise your tax burden as continual deficits - probably more. I like some aspects of Bowles-Simpson, but imagine if you had them running everything with the budget (that's what this demand for balanced budgets would entail). You don't think you'd get higher taxes out of that??? Come on - be serious.
The Below-Zero Lower Bound
1 hour ago