Suppose I'm in debt, have no car, and get a job offer for a good job that I can't reach by bus or train. If I could borrow money to buy a car should I stay unemployed and hope for a miracle?
Suppose my company gets an order for 100 widgets at $1million dollars and it will cost me $1/2 million to get the raw materials and pay for the labor and shipping to make those 100 widgets. Should I borrow the money or tell the customer to forget about it?
Suppose my city has factories closing and jobs being lost because the sea port needs to be dredged. Should the city borrow the money to reopen the port or should it just shut down?
As a business owner and Democrat, I am often amazed by what my Republican neighbors and colleagues say about government budgeting. Markets are almost always based on credit - on borrowing and lending. The whole (legitimate) purpose of the corporate bond market is to allow companies to "borrow their way into profits". The corporate bond market in the US is somewhere around eight trillion dollars. We have records of Summerian farmers borrowing money against a wheat harvest in 2000BC or so. David Packard and Bill Hewlett needed a line of credit from the Bank of Palo Alto to keep their business alive in early days. Businesses borrow to get out of debt all the time and have as far back as people know. And governments can also borrow for good reason. How can anyone say something so absurd as " you can't borrow your way out of debt" ?
In a command economy like the old Soviet Union,of course, none of this silly borrowing takes place at all. Are the people who say " you can't borrow your way out of debt" just against markets and capitalism altogether? My guess is that they are just using a simple slogan that make them feel virtuous without having to think about what sorts of borrowing is good and what is bad. If I borrow that money for a car and decide to get a Rolls Royce even though I won't make enough to keep up with the payments, that would be irresponsible. If I borrow money for my company and spend it on dividends even though we don't have enough income to keep running that would be irresponsible (and illegal for a small business, not, unfortunately, for a business like Bain Capital big enough to hire smart lawyers.) If my country borrows a trillion dollars to fight a war in Iraq for no good reason anyone can find, that's even worse. Some borrowing is prudent and even essential. Some is irresponsible or even criminal. Is that so hard?
Since 2009, the USA has borrowed a lot of money, but has spent a lot of it wisely. That's why the deficit is going down. Some money went to pay unemployment benefits keep the economy from tipping over before the recession could end. Some of the money that went to loans to advanced battery makers and electric car companies and helped to create jobs and give us a valuable new industry ( and, yes, some of those loans didnt work out, so?). Some money went to saving the big three auto companies. Some money went to Pell grants for students who will get jobs and pay taxes. It's reasonable to argue about expenditures that are wasteful, but you have to do your homework and not just yell if you are going to make sense.
It's infuriating that many of the same people who cheered as the GW Bush administration piled up huge debts for irresponsible or even corrupt projects are now telling us that they are "deficit hawks". Where were Paul Ryan, Eric Cantor, and John Boehner when GW Bush doubled the Federal budget for things like the Medicare Advantage subsidy to highly profitable insurance companies? There was no way that debt was remotely justified and the whole country will be suffering the consequences for a long time. And here in Texas, we have people like Rick Perry talking as if he were frugality itself while building up a monster debt ($31billion on Dept of Transportation alone) that nobody can even imagine how to pay back. Suppose you worked in a company where some of the partners built up a huge debt to pay themselves bonuses and suddenly started complaining when you stopped the waste and borrowed money to meet payroll and to get the business operating again? That's what today's Republicans and Tea Partiers are like. That's why nobody sensible takes them seriously.
You can't run a business, a household budget, and certainly not a country on simplistic slogans and pretending. I wish my Republican neighbors and business acquaintances and friends would act more like responsible citizens and less like people yelling into sports radio call in shows.