Thread by @SeanCasten

I'm glad to see this, but wish that discussions of fiscal matters in Washington didn't always confuse the terms "accretive capital investment" and "deficit spending". eenews.net/stories/106372…

This is a real problem: when we "score" bills to evaluate their fiscal impact, we consider impacts on short-term cash flow, but ignore any offsetting increase in asset values.

For anyone who says "we should run government like a business", show me a business that doesn't have a balance sheet.

For anyone who says "households balance their budgets, government should too", show me a household that never borrowed money (aka, "deficit spending") to buy a home

That's not to say we should be fiscally irresponsible of course; rather that our failure to create and maintain a federal balance sheet massively distorts the way we think and talk about fiscal policy.

It means we under-invest in assets, since cash outlays for assets are treated no differently than cash outlays for on-going expense. (In accounting parlance, we fail to differentiate between capital- and operating expenses.)

It also means we over-value the privatization of government assets, since selling off government property is treated as a source of cash flow, but not as an asset value write down. (See: below market sales of oil & gas leases.)

So should we invest in clean energy infrastructure that lowers energy costs, saves money on health expense and helps grow our economy. Absolutely! On purely fiscal grounds, as long as the increase in GDP exceeds our borrowing costs.

Because that's what fiscally responsible people do. Just don't frame that as a trade off against fiscal responsibility. An idea for legislation in the 117th, perhaps... /fin