If You Lived Here, You'd be Home by now

Years ago, when we lived in the big city, downtown developers tried to lure home buyers with signs for commuters that said, "If You Lived Here, You'd Already Be Home."

I think of that every time some pundit talks about how urgent it is to reduce the deficit. The last President to successfully reduce the deficit was Bill Clinton.

In fact, according to CBO projections, if G.W. Bush had continued the Clinton policies, we would have not only reduced the deficit, we would have paid off our national debt by now.

The last previous presidents who reduced the deficit were Jimmy Carter and Lyndon Johnson.

Ronald Reagan tripled the national debt during his tenure. By the end of George Herbert Walker Bush's administration, the debt was four times as great as at the beginning of Reagan's term. At the end of Bush I's term, the debt equaled 66% of the Gross Domestic Product. By the end of Clinton's term, it was down to 56% of GDP.

How would you like for the country to have zero debt right now? We'd have much better fiscal options, wouldn't we?

Instead, by the end of George W. Bush's term, our debt had risen to 83% of GDP, and we were in the midst of the greatest recession since the Great Depression. In fact, had it not been for the safety nets put in place after the Great Depression, we could easily have had an even greater depression.

But let's get one thing straight - the national debt didn't cause unemployment. Nor did it cause the great recession - mishandling of private debt and financial misfeasance did that. And so far, the national debt hasn't caused any inflation.

Now is absolutely the wrong time to balance the federal budget, thus reducing aggregate demand and stifling what little recovery we have going.

Once we get back to near full employment, though, we need to pay down the public debt and drastically reduce private debt. We won't be able to do that without getting back to making things instead of just making deals.

To get there, we need to reward the thing makers and take away special rewards for financial manipulators.