Anyone who engages in massive deficit spending believing in the unevidenced assumption that the future's uninterrupted growth will make up for it does not understand economics or inflation.
That is not always true. But either way, we'd be in a far better position if the GOP had not repeatedly passed tax cut packages which, whether or not they slightly raised tax revenue, always required so much more borrowing that our yearly deficit exploded. Each time they promise that revenue will increase so much it will reduce the deficit, and each time it does not. (Because why would any company use tax cut profits to invest in building more widgets for which demand does not exist?).
Yes, I know there are other factors in play, but each time in the last few decades a GOP president got a tax cut package through, deficits exploded. I swear, this would be a far easier thing to deal with if we hadn't been an extra ten trillion in the hole (if not more) from the last two decades' recklessness.
The next question becomes: ignoring the past, might it not
still be true that deficit spending in a crisis like this might produce a better - if still very crappy - outcome than doing nothing at all. The question Hoover faced. I'd say that one was already answered. Even despite the GOP's reckless tax policies of the past and even despite the increased danger of inflation they created were we to deficit spend, it seems likely better to do something rather than nothing.
The real problem here is human short-sightedness and greed. Yet there were other factors, but Clinton left us with a surplus. We then had two rounds of tax cuts, a pointless Iraq war on top of a justifiable Afghan war, Medicare D (which maybe is justified, but cost money), so on and so forth. That left us borrowing over 1 trillion a year in
the best economy ever. And look where we are now. Even without the bailout, our deficits for the next few years would be in multiple trillions.
But, what if we did nothing and everything snowballed even more, a la Great Depression? The damage would likely be more.
What we really need to do once we are out of this is incrementally raise taxes across the board so that we are actually paying for what we spend, and only then talk about whether or not we want to cut spending. But we're not going to do that because in general, people are greedy and short-sighted. They'll vote out politicians who raise taxes. But politicians won't cut spending because everyone has their sacred cows and quite frankly I don't think it should be cut. I would prefer to pay a larger chunk of my income in taxes in exchange for the kind of security that most European countries provide their citizens.
Right now, we're still roughly around a 1:1 Debt:GDP ratio. We know that done properly, a country might even maintain a 2:1 ratio (see Japan). But we also know the end of the line is out there, somewhere, and things will get rougher the closer we get.
Here's my prediction: we kick the can down the road. We will not raise taxes to pay for what we spend. Some new disaster will be the last straw. The house of cards will tumble. True catastrophe will occur, spreading globally. Human advancement will be stalled if not knocked back for quite a while. Then we'll repeat it. Every single time the new generations will say "how could they do that?! The IDIOTS!", and they'll do better. But once they do better, their descendants will say "see, we got out of it. Let's push things". So on and so forth. So the wheel turns.
Cynical manifesto nobody will read complete.
