It seems like a lot of people, particularly those in government, are confused about the difference between building a bomb and building a bridge. A bomb does not have much function other than to blow up people. I guess you could argue that in the right circumstance it might provide the owner with some protection against an enemy, but I think it would be hard to really make the case that the majority of weapons have a utility. Given that our government is running about a 40% deficit (it takes in revenues that are about 60% of what it spends), we must borrow money to build the bomb. Now, I don’t actually think we should build bridges ( although I think we should repair the ones we have) but I do think there are things that we could do to create value and actually pay back the money and interest we have to borrow to build to such things. A great example would be a national smart grid to improve the distribution of electric power.
It seems that the government and our citizens cannot tell the difference between borrowing money to create value and borrowing money to destroy value. What if we used our soldiers and the industries that provide materials to conduct wars (remember the USA spends more money in defense then all the other countries of the world combined) to actually build things that would pay for themselves over time? This kind of borrowing can be supported by our economy. There is a difference between borrowing money to finance a vacation and borrowing money to get a college education, but it appears our political leaders cannot see this difference.
There is an other example of lack of understanding. Government officials and TV pudents talk about how much money America corporations have in their treasuries. They say companies are not spending this money because their is no consumer demand for more of their products. But there is another reason that seems to escape all these talking heads. So much of the profits of American companies were made overseas and are not subject to US tax until they are brought back. So if an American company wants to use this cash to invest in the USA they first have to pay about 40% in tax. Given our situation we should allow companies to bring this money back without tax- provided they invest the money in creating US jobs or pay dividends to their shareholders. This should get the money in circulation. And speaking of dividends, they are taxed twice. First they are taxed at the corporate level and then at the individual level. Not only should they be taxed only once but frankly, I don’t think they should be taxed at all.