Deficit Target

Republicans want a balanced budget; Democrats don't. Democrats argue that as long as the deficit is below GDP growth, it's sustainable. I'm ambivalent about this debate; I'm drawn to the idea that the government spends less than it brings in, but I can also see that we may be better off by running a consistent deficit.

What the Democrats don't account for, though, is the cyclical nature of the economy.  Basically, their target is to overspend by GDP growth in the best years and then spend even more during recessions. If they want to stick with the deficit being less than or equal to GDP growth, that should be the target over long periods of time including ups and downs of the business cycle.

The Democrats' approach would mean our debt stays the same during boom times but explodes during busts (much like the last four years), and the national debt would inexorably march upwards. President Obama has said his goal is to make sure the debt is stabilized over the next ten years, but that's not good enough. It has to go down, because when the next recession hits, which budget projections don't expect, the debt will increase.