What happens if deficits don't matter?

There are so many things wrong with this Salon article by Michael Lind that I have a hard time figuring out where to begin. First, his premise that deficit hawks - a category that all of us at LiB fall into as of late - are against borrowing or deficits of any kind is absurd. Yes, we are opposed to unsustainable deficits and government spending, but we acknowledge that there are times during which temporary and reasonable deficits must happen.

This is not a controversial position.

Lind attacks us for focusing on "kitchen table" issues and preaching against debt of any kind. The problem is that no one I know of in conservative circles claims that debt is in and of itself a bad thing. The problem is debt that families, businesses and even governments cannot afford. Lind lays out the "dodo" argument:
Consider household borrowing. In the deficit dodo universe, no family should ever take out a loan to purchase a family car. Why? Well, according to the deficit dodos, borrowing is bad, because the interest payments on loans represent money that could be used for something else. That's true. But the real question is whether it makes sense to have the use of the family car right now, in return for modest monthly payments over time, or whether the family should wait to purchase the car until it saves enough to pay the full price upfront by showing up at the car dealership with wheelbarrows of carefully hoarded cash. Most American families — and most car owners everywhere in the world — prefer the installment plan to the upfront purchase plan. And they are right. They are not dodos.
The problem with the federal budget is that we aren't buying a house, or a car. We are simply paying for our day to day expenses. The President's budget is $3.83 trillion with a $1.6 trillion deficit. We're borrowing more than a third of our budget just to pay the bills.

At least when families and businesses purchase homes or land or new machinery, they are making an investment in tangible property that will increase their own net worth or improve their productivity to earn more money. That is not the case with government spending.
The President's budget will increase the debt at an alarming rate, and if Lind wants to use household analogies to justify this type of spending then he needs the proper analogy. The type of borrowing the government is doing is akin to credit card debt. It's borrowing money just to stay afloat. We have so much mandatory spending - you know, like a household has bills - that we are putting the mortgage payments and the car payments on the credit card. But somehow we still manage to go and buy a 60" flat panel TV and the new iPad.

But this isn't really the problem that Lind has with us deficit hawks. He has a fundamentally different view of government spending than we do:
The fact is that governments, like families and corporations, are potentially immortal... Neither a family nor a corporation nor a government need ever have zero debt. All three institutions can roll over debt forever, generation after generation, as long as they continue to exist as social entities, and as long as the debt service does not undergo cancerous growth.
I hate to break it to Lind and other liberals who think that deficits don't matter, but when we triple the national debt in ten years, we've reached cancerous growth. The type of debt he describes is only sustainable if the next generation can afford it.

For years GM acted as if it would dominate and grow as it always had. It could afford ever more expensive health plans and compensation packages for its employees. It didn't matter if they lost money for a few years, because they were GM and they would survive. But they didn't. The US government had to bail them out.

We're the largest economy and the largest government in the world. Who will bail us out?