Borrowing today to fund the innovation of tomorrow stimulates our economy and generates revenue growth that pays back the debt. That's why emerging economies such as Singapore — which is still riding high despite the worldwide economic downturn — carry a debt-to-income ratio that looks more like IBM's, borrowing money to keep its economy innovating and growing.
Yes, too much debt can indeed be dangerous, especially debt that is not directed at growing future opportunity and ultimately paying down that debt. But in the midst of a stagnant economy, with the private sector sitting on record amounts of unspent capital and failing to create jobs, government is the spender of last resort — the only way to jump-start the economic engine of our future.
Often, those who oppose federal government spending compare the federal budget to the family budget. Even President Obama has said, "Families are tightening their belts. Their government should, too." Indeed, when families run up credit card debt, though often understandable or even unavoidable, that kind of debt is seen as irresponsible. Think of buying a home. Yet most families grow through strategic debt, including assuming decades-long mortgages. Is such a move irresponsible, or simply a strategic investment in a family's future?
Critics of government often say public institutions should be run more like efficient, profit-driven businesses. In that case, it's time to end the ideological attacks on our federal debt and let our government borrow the same way America's best businesses do. The dividends will come back to all Americans — not just in dollars but also in better schools, better health care and retirement, new roads, safer streets and greater prosperity for all.
Now I though economists were bad but this takes it to another level.
First, companies had debt to generate wealth. If they don't do so and return the money, unless you are GM with unions, you go out of business. A dollar of corporate debt generates $x of new wealth. Now show me what $x of DoE debt generates, just look at Romer and her plan, no way!
Second, families do not get wealth with debt. Did the lady happen to miss the last few years. In fact they piled on debt and well we all know the result.
Third: Yes, if you want the Government to borrow as a business, show me your plan and accept the consequences when you fail. You're fired!
Fourth, the Government does not generate wealth! The entrepreneur does that. True fact dear community organizer! Just look at DoE, 40+ years of hundreds of billions on electric cars, no result. Would we ever allow that in the real world? No way.
Fifth some facts. Caterpillar has annualized $52 billion in revenue, and $20 billion in long term debt. Now this financial whiz states:
The United States generates approximately $14.5 trillion in GDP each year and carries, currently, $14.3 trillion in debt. That represents a debt-to-income ratio of roughly 1-to-1.
This is even more than a mixed metaphor. She is mixing income, profit, GDP, and she is all over the place comparing apples to oranges. She seems to argue that all the money we manege to spend or invest is more than enough to cover our debt! She clearly fails to understand cash flow, economic growth and the like. This is what we face going forward, this is what a community organizer sees in their reality, no wonder we have problems.
Perhaps we should have a candy store own run for President!
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