In Stephanie Kelton's book, The Deficit Myth, she pointed out that the notion that the government should be run like a household or a business is incorrect. First, government serves a special function in society that is not equivalent to a household or business. It serves the people and provides vital services for communities. This is true at the federal level as well. Government does not exist for the purpose of profit like businesses do. It is also not on a simple budget with income and expenses. Government budgets are more complicated because the government, at the Federal level, creates and issues the currency. And so if the Federal government shows debt on its books, that's not necessarily a bad thing like it might be for an individual or family.
Why is government debt a good thing? Since the Federal government is the issuer of the currency, then it follows that its spending is not taxpayer funded (that's a myth). The government creates the currency, and then disperses it to various entities. If the government has debt, that means the currency is in the public domain and can be used by others for various projects/activities. Treasury bonds are sold as a means of covering the debt. The US government hasn't borrowed money from some mythical evil lender. It has "borrowed" the money from itself. The increase in the currency supply is simply an entry in a digital ledger.
Debt is likely the wrong term to use because it implies something that isn't really happening. It would be better to think of this concept as money in circulation. If that number gets too high, it could be a problem, but that depends on a number of other complex factors. Needless to say, the US government isn't at a point in which there is too much money in the overall supply.
The arguments over the debt limit are disingenuous and dishonest. The government is not a household and it is not a business. Households and businesses don't issue currency, so they have to operate under different rules than the US Government. But politicians either know this or they're just plain stupid. The term government debt has been part of the public lexicon so long that it is hard to change the conversation about it. The idea that the current debt is something we are passing on to future generations to pay back is complete bullshit. There will always be debt, if you want to use that term. It's how the government operates. By the way, notice how these same politicians seem to have no concern about passing a climate disaster on to future generations. That's how you know they have no concern about the children of the future. The debt is simply a political weapon to bargain for spending cuts and tax cuts (how do tax cuts help the debt???).
Why do conservatives want spending cuts? That's a good question, and it has nothing to do with reducing the debt because they don't care about the debt (Notice how the Federal deficit always increases more under Republican administrations than it does under Democratic ones - why is that?). To answer the question of why Republicans want spending cuts, take a look at what gets cut. It's never the military. It's almost always programs designed to help people. They are the so called "entitlement" programs for those "other" people that are frequently on the chopping block. By cutting these programs, the demand for them is not decreased, but instead, that demand can now be shifted to the private sector in which a profit can be made. In other words, spending cuts enable the privatization of key services that the government has been fulfilling for decades. Any government spending on these programs will then be coordinated through private entities. This is similar to how private contractors engage with the military now. The government will become more of a cash cow for corporate America. That's how conservatives see government spending - not as something incurring debt, but rather a large pool of money that they would like to get their hands on and use to generate larger and larger profits. That's what would happen if Social Security is cut and then privatized. The big banks would then be in charge of that large pool of money which they could use for a variety of purposes with no real guarantee for citizens that they will have to pay out benefits.
So, the debt limit discussion has nothing to do with the debt. It has everything to do with shifting more and more money into the hands of large banks, large corporations, and the oligarchs of our society. As usual, the average voter doesn't realize this and is instead triggered by the word debt. They react to the notion that the government needs to control its spending, especially on social programs and other fluff like education. Military and police budgets are never put on the table. Those budgets always seem to be able to find new cash - where do you think that comes from?
The next time you see politicians decrying the debt situation, know that they are full of shit. Whatever deal they reach, you will likely end up being worse off (unless you are an oligarch, then congratulations are in order).
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