Bad ideas never sleep. Even though we’re all focused on a lawbreaking president who places his own concerns above the natural interest, I’m still getting mail from people sure that federal debt is a grave threat. So let me take a break from the news cycle to talk about that 1/
Let me start with a picture. Here’s federal interest payments as a share of GDP. They’re about half what they were at the end of the Reagan administration. Does this look like a crisis? 2/ 
It’s true that the absolute debt number, even as a share of GDP, is way up. Interest payments are low because interest rates are low. But why should we care about the size of the debt stock? It’s debt service that matters, if anything does 3/
And even the interest payment number gives a misleading picture. *Real* interest payments are much lower, indeed barely positive. And the budget surplus needed to stabilize debt relative to GDP, which is a much better measure of the debt burden, is *negative* 4/
That’s because the interest rate is below the economy’s growth rate — which is actually normal.
Wait, there’s more. Interest rates are low because private spending is consistently weak, probably because of demographic factors. And that has implications for budget policy 5/
Wait, there’s more. Interest rates are low because private spending is consistently weak, probably because of demographic factors. And that has implications for budget policy 5/
Specifically, deficit spending is actually good under these circumstances, because it helps sustain demand and makes it easier to maintain employment.
Now, we should be using deficits for good — rebuilding infrastructure, not giving corporate handouts 6/
Now, we should be using deficits for good — rebuilding infrastructure, not giving corporate handouts 6/
But while the way Trump has blown up the deficit is bad, the deficit itself just isn’t an important problem; which makes you wonder why so many people are still determined to believe otherwise 7/
