Biden’s Economic Team Is Wrong: Deficits, Public Debt Matter

While deficit spending makes sense now, after the pandemic ends, economic policy should be geared to reduce budget deficits.

Recently a panel of distinguished economists who will likely advise Joe Biden, met virtually at the Brookings Institute to discuss the impact of annual government budget deficits and the total public debt.

They essentially concluded that at least in the short term, the deficit and the debt really don’t matter. That means they will encourage the Biden administration to vastly increase government spending.

Former Treasury Secretary Larry Summers attacked the wisdom of the Obama-commissioned 2010 Simpson-Bowles recommendations that the deficit should be reduced immediately and that the federal government should work toward a balanced budget.

Summers said, “Everyone was in agreement that having something like Simpson-Bowles would have been a good thing. If that goal had been achieved the consequences would have been catastrophic.”

Summers and the rest of the panel said that deficits and the large public debt should be tolerated, at least in the short term and perhaps even longer, because of the current state of the economy. They do have a point, but the problem is that once deficits are incurred, it becomes extremely…