Budget Worries Hinder Ability to Fix Economy

Budget Worries Hinder Ability to Fix Economy: "But that would have required a much larger stimulus package delivered over a longer period of time than was politically feasible.

There are many explanations for the less than fully aggressive response, including ideological opposition to government involvement in the private sector from Libertarians and Republicans; but a big factor has been fear of an exploding public debt.

We were already running a large deficit when the recession hit. The Bush tax cuts, combined with the wars in Iraq and Afghanistan, explain much of the deterioration in the budget from the surpluses of the Clinton years. Had we made the sacrifices necessary to fund the wars instead of borrowing to pay for them, and if we had not embarked upon a budget-busting trickle down policy of tax cuts for the wealthy, the budget would have been in much better shape when the recession hit and our response could have been much more aggressive.

There are good reasons to take on debt when the economy goes into a recession, and current fears about the debt are overblown. There is no sign that financial markets are worried and we ought to be doing more. But support for borrowing at the level that is needed has been lacking among policymakers in Congress."