Deficit-worriers portray a future in which we’re impoverished by the need to pay back money we’ve been borrowing. They see America as being like a family that took out too large a mortgage, and will have a hard time making the monthly payments.
This is, however, a really bad analogy in at least two ways.
First, families have to pay back their debt. Governments don’t...
Second — and this is the point almost nobody seems to get — an over-borrowed family owes money to someone else; U.S. debt is, to a large extent, money we owe to ourselves.Families don't have to pay back their debt either. They, like the government, can pay interest payments until the end of time. There is absolutely nothing sacred about government debt, other than the near religious belief that they will pay you back.
As to his second point, think about what can happen when you loan the government $100.
1. The government tells you to jump in the river and doesn't pay you back.
2. The government taxes you $100 and gives you back your money.
Either way, you're out $100.
Government debt is nothing more than delayed taxation. The left sincerely believes that higher taxes and more government will help the economy. That's nuts, and so is Mr. Krugman.