There are serious discussions regarding whether whether deficit spending is really bad for the economy. My gut feeling is well summarized by Michael Kinsey in his article in the Atlanta Monthly when he discusses the implications of the massive economic stimulus and deficit spending:
But this cure has been one ice-cream sundae after another. It can’t be that easy, can it? The puritan in me says that there has to be some pain. That’s not to say that there hasn’t been plenty of economic pain. But that pain has come from the recession itself, not the cure.The entire article can be read at http://www.theatlantic.com/magazine/archive/2010/03/my-inflation-nightmare/7995/ and the exchange between Paul Krugman and Kinsey is on Greg Mackiw's blog http://gregmankiw.blogspot.com/2010/03/inflation-debate.html.
Our politicians are behaving like physicians run a muck, operating a clinic where patients line up to get their fixes of steroids and oxycontin. As long as they can continue to dose everyone, everyone appears to be happy. There is an element who believes that this situation can be managed without any real pain. I have my doubts. As Kinsey goes on to write in his response to Krugman and Matt Yglesias:
A final word to Matt Yglesias, who thinks my problem is "thinking too moralistically about the economy," because I express doubt that we can escape without pain from the dilemma we find ourselves in. Obviously (or perhaps not) this is a prediction and not a hope. I am not in favor of pain. I just don't see any way to avoid it. Yglesias apparently believes that we can escape our fiscal dilemma without pain. I would like to know how. And if there is such a way, why have we denied ourselves for so long? Why do we ever bother to show fiscal restraint? Why have taxes at all? Why deny ourselves anything money can buy? If $15 trillion in debt can be a freebie, why not $30 trillion or $60 trillion?After another exchange with Krugman, who justifies his opinion by linking to his book chapter stating his opinion, Kinsey simply states " Meanwhile I (along with others of his fans) am still waiting for Paul’s inflation-free recipe for getting us out of this mess."
Like the doctor who places a patient on steroids or narcotics, we need an exit strategy, something not well articulated by the Nobel laureate economist. I share Kinsey's skepticism about how this will happen. It appears their approach is to give the sick patient more and more drugs to make them feel good as opposed to treat their disorder. Sounds like hospice.