Now that Joe Biden is becoming President, I assume that “conservatives” are going to suddenly remember that one of their core, unshakable beliefs is that deficits are bad. During the periods when this core, unshakable belief is operational, these folks will often thunder about how government needs to tighten its belt just like families do when money gets tight. There are a number of problems with this analogy, but I wanted to post an observation I made three years ago when Trump and the Congressional Republicans passed their tax legislation:
Regarding the analogies to personal finance that will be used to claim we must “tighten our belts” when this tax bill inevitably increases the deficit:
The difference between government spending and personal spending is that, in a household, the adults in the family feel free to allocate 100% of the family’s income according to the family’s priorities.With a country, the government does not (and should not) feel free to allocate 100% of the country’s income. The core question, and one not easy to answer, is what portion of the country’s income should be devoted to the general welfare. It’s something more than 0% and something less than 100%.
If you get too close to 100%, nobody is going to want to work very hard because there is no upside to success. If you get too close to 0%, quality of life will erode so much and wealth will aggregate in so few hands that the majority of people aren’t going to see the value in respecting the laws that seem mostly devoted to protecting the property rights enjoyed mostly by a small sliver of the population.