Two days in a row the @smh has run a scaremongering article about the deficit. That’s before hardly any money has even gone out the door. @ErykBagshaw and @swrighteconomy, please stop! Now is *not* the time to be worrying about the deficit. Some facts over the fold... 
1) We started this with net-debt-to-GDP of around 40%. The US started at over 100%. And they’re going *further* than us on stimulus.
2) The $130bn wage subsidy, the most expensive policy measure ever introduced in Australia, increases net debt by just a third.
2) The $130bn wage subsidy, the most expensive policy measure ever introduced in Australia, increases net debt by just a third.
3) That amounts to just $333 per year per current taxpayer over the next 30 years. How much do you pay each year for car insurance? More than $333? Do you see that as a crushing burden? This is income insurance for the entire Australian workforce. It’s cheap.
4) Interest rates are currently near-zero. The interest rates we pay for this spending program are not floating. They are fixed at near-zero for the next decade or more. The money can be paid back little-by-little over decades. $300 or less per year by each taxpayer.
5) The alternative is catastrophic. Not just for livelihoods or the economy but for the *budget*. If we didn’t use this insurance now the economy would go into a deep and long recession unlike we’ve ever seen including in the depression. The budget would be wiped out for decades.
6) The current crisis is no reason to radically alter government tax or spending commitments. If we manage this right, and we seem to be doing about as good as anybody on the fiscal side, this can be a short blip with a return to trend. The deficit will then take care of itself.
7) The obsession of Australian politicians, journalists, bureaucrats, ex public service leaders and bankers with the budget deficit is maddening. It is no yardstick by which to measure the quality of government policymaking. It is a cancer at the heart of government. Cut it out.
8) In future, in addition to speaking to a former bureaucrat or a bank economist, also seek the opinion of an expert in modern fiscal policy. You can contact me any time. I even used to work on the budget at Treasury. Or @danielleiwood, @profholden or @chrisedmond, among others.
BTW, while lying in bed this morning composing this thread, I pulled from memory the wrong debt figure. I quoted gross debt. Net debt, which is the number that matters, is half what I quoted at around 20%. The point is even stronger.
