Taxes, Deficits, and the Future

I just received a notice on my phone from the Wall Street Journal saying the federal deficit this year will be $984 billion.

I majored in Economics (undergrad and grad school), my program was primarily monetarist professors (versus Keynesians), monetarist meaning Milton Friedman was a hero (as were low deficits).

There is nothing wrong with deficits, especially in a strong country like the US, and also when times are tough. But this high a deficit when times are great makes no sense. This is when we should be running surpluses, like we did in the 1990’s.

It’s like our businesses or households. There’s a time for debt (mortgage, car, line of credit, new equipment, etc.) but it’s also important to save. We don’t want to leave our children with (personal) debt and we shouldn’t leave them with government debt either.

My conclusion is, it doesn’t matter which party is in control, when in power they all spend like money grows on trees.

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