New Economic Perspectives has the article Democrats Should Reject Bernanke’s ‘Wily E. Coyote’ Criticism of Trump’s Deficits.
Ben Bernanke recently gave a speech predicting that President Trump’s deficits will cause the economy to “go off a cliff in 2020.” Many Democratic Party politicians, of course, will rush to embrace the criticism and prove that they are the true party of fiscal responsibility. They can then get back to pushing for increased taxation and cuts to the safety net “to save it” from collapse – and feeling virtuous. These Democrats will glory in their supposed virtue and gravitas as they oppose ‘excessive’ stimulus, cut the safety net to ‘save it,’ oh-so-judiciously cut funding for social programs, and push for higher taxes. They know this is bad politics, but that adds to their faith that the more bitter the medicine the greater the curative properties. Faith-based federal deficit phobia, however, is terrible economics and terrible politics.
This is a very good explanation of the tsunami of propaganda that is about to crash upon us.
I’d like to also mention that it matters what we spend the money on while we are running a deficit.
If we spent the money on an investment that created more value than it cost, it would improve our well being. As an example, investing in productivity enhancing capital (including infrastructure), would alleviate the current seemingly full employment as a barrier to economic expansion. Even better would be if the benefits of productivity enhancement were equitably shared with the workers.
If we spend too much on the military, particularly stuff that we blow up when we use it, then this is not an investment that leaves any useful infrastructure behind.