“You Can’t Spend Your Way Out of Debt”
There are tax protests going on today, because the government is spending a god-awful amount of money – more god-awful than usual. Or maybe they’re because a group of people who are accustomed to getting their way aren’t getting their way after 8 years. I’m not going to defend or attack what our government is doing at this point, but there is a sentiment going around these tax protests that I feel the need to say something about.
“You can’t spend your way out of debt”
Really? REALLY? Because last I checked, that’s exactly how most companies operated – most companies, at the start, have no cash flow and require a loan or investment – which they spend – in order to keep going until they can build up cash flow and start making money. If that cannot work then I guess we haven’t had any successful businesses in the last couple of hundred years.
If spending is all there is – if you’re just burning money – then of course you’re not going to get out of debt, but saying that’s all that’s going on is a gross, naive over-simplification.
I’m not saying here that the government is actually using the money it’s spending wisely. I really have no idea. I’m uncomfortable with the amount of money they’re spending, and I’m uncomfortable with the idea of simply doing nothing about current financial problems. But that’s beside the point – the statement that you can’t spend your way out of debt is simply false. And if that’s the best understanding of finances that the people who ran the country for the last eight years has, then it’s no wonder that the country is as screwed up as it is now.
Tags: taxes
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April 15th, 2009 at 6:43 pm
What the government is trying to do with spending now, is to more or less repeat what worked before.
April 15th, 2009 at 8:09 pm
I would make a distinction between spending and investing. Both involve money going out but one does so wiht the expectation that that spending would result in more money coming back in sometime in the future. People who think the government is doing good things like to call it investing. I’d guess that the people saying “you can’t spend your way out of debt” disagree and think it’s just spending.