My letter to the editor responding to a letter that appeared a few weeks before ran in today’s Albuquerque Journal business section. Full text below:
Deficit “deniers” like letter-writer Dan Metzger seem to believe that government, especially the US federal government, has magical powers. To them, federal debt and deficits are not a problem and in fact are good. How ridiculous!
For starters, Metzger seems to assume that research and development forms a large proportion of total federal spending. This is simply not the case. Total federal R&D spending is less than 5 percent of the overall budget. Far higher percentages go to transfer payments and other spending priorities that have no positive impact on economic growth.
Metzger is correct that the federal deficit has no “due date,” however interest payments on the ever-growing debt will kill economic growth if/when interest rates rise above their historically-low levels.
More importantly, the federal government simply wastes money on boondoggles costing millions or even billions of dollars including farm and ethanol subsidies (to name just two).
The economic problem we face today is not one of too little federal spending which has doubled since the end of the Clinton Administration; rather, it is too much spending which crowds out more efficient private sector investment and sustainable economic growth.