What about that deficit?

I’ve heard a lot about the deficit and our national debt the last five years. And I’m tired of people trotting out the canard about how irresponsible we’d be if we “ran our household budget like the government budget.” Even President Obama has made this terrible comparison. It’s apples to oranges, to use another cliché.

First and foremost, do we get to print money and set interest rates? I think not. Yet our government can do these things to respond to economic conditions.

Second, how many of us can make it through life without acquiring debt to pay for an education, automobile or house? I congratulate you if you have the resources to simply write a check. But for most of us, this type of debt is reasonable and manageable if we are employed and sensible with our dollars.

But government debt is a completely different beast because government controls monetary policy and government spending is actually independent of government debt. Counterintuitive, isn’t it?

Next, look at history. Deficits simply reflect current economic activity. Because our economy is depressed, our deficit is larger. When economic activity increases, we’ll see the deficit drop.

How to increase economic activity? Well, employing people would help, but we’ve not seen our “job creators” pony up money to expand and hire. Instead, they’re hoarding their money or investing elsewhere.

History shows that in situations like the present, government spending to support people via employment and social programs helps get the economy going. Of course in the 30s, direct employment programs were also effective. And for all you folks who believe World War II, and not FDR’s social programs, ended the Depression, I’d note the war created government spending -- just on the war effort.

Right now Europe is tumbling into a double-dip recession because in their single-minded focus on debt, they have cut spending to the bone. Austerity rules, and it’s creating instability, not growth.

America, particularly our Congress, needs to take note. To keep our economy moving, government is the only entity large enough to take appropriate action.

And as Robert Greenstein of the Center for Budget and Policy Priorities notes, stabilizing our economy involves other factors, most notably rising health care costs. “In the long run, the single largest contribution to deficit reduction will need to come from slowing the rate of growth of health care costs throughout the U.S. health care system, in the public and private sectors alike. A slower rate of health care cost growth will produce substantial budgetary savings in areas ranging from Medicare and Medicaid to the tax exclusion for employer-based health coverage,” he writes.

So the whole thing is complicated and simple sound-bite solutions like a balanced budget amendment or cutting social programs or cutting taxes won’t work.

Develop a better understanding of government debt and the deficit by reading -- instead of listening to TV talking heads.

Start with “Deficit Dogma Debunked” by Marshall Auerback at: http://www.salon.com/2012/04/19/deficit_dogma_debunked/. Then dig deeper with Greenstein’s article, “A Framework for Deficit Reduction: Principles and Cautions” at: http://www.cbpp.org/cms/index.cfm?fa=view&id=3435.