I had one of those Ah Ha moments the other day while trying to stay cool in front of the TV. Former RNC Chairman Michael Steele was talking to Chris Mathews on Mathews' program during which another guest suggested that President Obama would be politically wise to propose a large public works project before the election. While Mathews and the other guest tried to discuss the merits of such a plan, Mr. Steele kept interrupting with the comment, "With what?" Referring, no doubt, to the fact that the Federal budget is, and has been, running rather large deficits.
"With what?" he'd say. Then louder, "with what?" The simple message being that in a time of deficit spending and increasing government debt we, as a nation, can't afford to repair our crumbling infrastructure. No way, no how! Ask pretty much anyone on the Republican side of the issue and they will give the same response. No way, no how! Well, they're wrong.
Here are a few uncomfortable facts for Mr. Steele and the GOP. We have been running deficits for quite a long time and the country has not gone under yet. The deficit spending of WWII was, as a percentage of GDP, far higher than the deficit today. And, maybe the most important, we can and are borrowing money about as cheaply as any country in history.
As any good business person will tell you, a business prospers when it uses OPM. That's "Other Peoples Money." Whether from loans or investments, companies know that leveraging there own, often, limited resources with the resources of banks or investors is often the only way to grow a business. This is particularly true in the area of capital improvements. Building a new factory or store takes far more resources than any sensible business can, or would, keep on hand. It's good business.
But when it's the countries investments? Not so much. The current GOP thinking is that we can only spend what we have and since we don't have any extra, we can't spend at all. This way of thinking, while seeming to make sense in the "around the kitchen table," type discussion, flies in the face of what governments at all levels actually do. Have the Republicans never heard of local bond issues? You know, for schools and new playgrounds and roads and the like. This is how governments, businesses and people finance today's spending with tomorrows dollars.
And I'll repeat the single most important factor. We, as a nation, can borrow from the investors of the world at incredibly low interest rates. And those same investors are clambering to buy our bonds. They're standing in line and throwing money at the Federal Reserve. Each bond offering gets double or triple the offers than there are bonds available.
So the next time you hear a voice on the right question "with what?" you might want to point out these uncomfortable facts. It won't change their mind, but it's fun to watch them stammer out some lame answer. Hey, it's summer. Without football we need to get our fun somewhere.