A Fiat Currency Makes a Difference

The Albuquerque Journal OP-Ed Page published the following this morning with the title "High Debt Ratio Not a Big Deal - We are a country that can service our own debt." The only changes they made to the original text was to double the number of paragraphs. That edit improved the piece, I think.
                            

In his article of January 19, Professor Gisser discusses some solid economic points about our economy that would mostly be true if we were still on a gold standard. Fortunately, since 1971 we have had a fiat currency with a floating exchange rate.

Consequently, we can always service our debt and have no chance of becoming another Greece, and the Fed, not the external market, establishes the interest rates on the Treasury securities that constitute our public debt (and net private savings).

Further, there is no reason to believe that a 100% debt-to-GDP ratio or more is a matter of great concern. There would be concern for a household but not for a government that issues its own sovereign currency.

The Fed might decide to raise interest rates in anticipation of inflation. But, inflation is a very distant threat when there is excess productive capacity, which we have with millions unemployed. The production lost from those unemployed resources is gone forever.

Professor Gisser cites some past administrations to bolster the idea that tax decreases increase federal revenue. But, he doesn’t tell the whole story. Sometimes tax decreases work the other way.

Not mentioned by Professor Gisser were the rapid rises in deficit after both the Reagan tax cut of 1981 and the Bush II tax cut of 2001. Not noticed by most critics of public debt is that private debt soared to 300% of GDP at the height of the crisis.

It was the private sector that couldn’t pay its bills.

The non-intuitive fact is that the economy cannot be managed effectively by looking at tax revenues and deficits. By simple accounting identity, high government deficits correspond to high private saving and net foreign imports.

The government has no control over the private sector’s desire to save or to import.

Consequently, the deficit is largely beyond government control. Better metrics would be unemployment, use of productive capacity, and inflation.

Contrary to media and political hype, our large deficits are not due to profligate government spending but to high unemployment. Austerity, which passes for responsible fiscal policy, is actually irresponsible as it tends to increase unemployment.

A country that issues its own currency has both the ability and responsibility to spend counter-cyclically to economic cycles to maintain a healthy economy.

Obama Has Another Chance to Abolish the Debt Ceiling Forever

In the last few days the Republican-controlled House has decided to increase the ceiling for a few months. So, the Republicans put their sword back in its scabbard for use at another time and circumstance of their choosing. Obama now has time to reconsider his options to get rid of the debt ceiling forever.

On its face the debt ceiling is a farce in the present-day economy. Its roots lie in laws passed during World War I when the US was still on the gold standard. Its effect is to deny the administration the means to accomplish spending already approved by Congress. It is unlawful for the administration to refrain from making approved expenditures; at the same time, it is unlawful to exceed the debt ceiling. Something has to give, and two viable options exist.

Natural log of net private savings

First, Section 4 of the 14th Amendment to the Constitution says in part,

“The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.”

Although it appears to the layman that this would render the debt ceiling unconstitutional, legal scholars have argued both ways on the issue. So far Obama has refused to take up the fight, which might be litigated finally by the Supreme Court. During litigation Obama could boldly pay the nation’s bills.

Second, and preferable, a two-year old proposal to mint a $1-trillion platinum coin1 has resurfaced. Legal scholars have generally agreed that it would be legal for the Treasury to mint such a coin. Economists, including highly regarded Paul Krugman, have conceded the economic feasibility of the coin solution.

The Treasury, by law, can create coins as money out of thin air and a bit of metal just as the Fed can create money out of paper (or computer keystrokes). After depositing the coin in its checking account at the Fed, the Treasury could then write checks on its account without borrowing. Of course, many people, who know neither what money is nor how it works, were aghast at such shenanigans while, at the same time, apparently comfortable with the farcical dilemma presented by debt ceiling.

As the Treasury pays bills out of its coin-enhanced account at the Fed, bank reserves increase. Eventually, if the Fed decides to undo quantitative easing, which also increased bank reserves, it will have to sell Treasury securities to drain the excess reserves. Only at that time, all excess reserves including those enabled by the coin would be converted into Treasury securities that we call debt. That is, excess funds in bank reserve accounts would be converted into savings accounts.

To date, Obama has rejected both the 14th Amendment fight and the platinum coin loophole as means to obliterate the debt ceiling threat forever. Instead he is permitting the Republicans to use this irrational debt-ceiling weapon whenever they like.

In failing to challenge the debt ceiling he is allowing himself or the Senate to be coerced into cutting benefits from the cherished safety nets of Social Security, Medicare, and Medicaid. Perhaps, that is what he wants.

1. With fiat currency the nominal value of the piece of currency does not depend on the market value of the material of which it is made. The difference is called seigniorage and is profit for the Treasury.

Currency Issuers and Users - Euro

Bishop John Shelby Spong is one of my favorite writers and progressive thinkers. Recently my friend Don called my attention to a recent weekly letter by the Bishop reporting on a trip to Europe with comments on its economy. Only recently would I have found the temerity to lecture the supreme lecturer. But, I did with the following comment on his website.

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Your interesting essay might have shed a different light on austerity in Europe had you appreciated the difference between a currency issuer like the US, UK, Sweden, and Hungary and a currency user, as are the states in the European Monetary Union.

After President Nixon took us off the gold standard in 1971, all major countries have had fiat currencies with floating exchange rates. In the early 1990s a growing community of heterodox economists centered at the University of Missouri Kansas City have been studying how a fiat monetary system functions. This community foresaw the trouble in the EMU as it was being constructed in the mid 90s, it foresaw the current global recession, it explains why the S&P downgrade of US debt was a non-event, and why the Fed's quantitative easing has been ineffective. The insights of this community provide some perspective on your observations in Europe.

The UK has imposed austerity on itself consistent with the neoliberal dogma dominating current global economic practice. And, it is suffering the inevitable consequences as you observed. A currency issuer unlike a household, business, or US state government has the policy latitude to deficit spend until the unemployed productive resources are fully employed. It can do this counter-cyclicly to normal business cycles to maintain a healthy economy. The UK is unnecessarily causing human suffering throughout the land.

Euro is not a sovereign currency

Members of the EMU do not have this policy latitude. As users of their currency, they are under a de facto gold standard where the euro takes the place of gold. To obtain euros they must either borrow them or be net exporters in trade with other euro nations. The members of the EMU have given up their monetary but not their political sovereignty. So, unlike states in the US, there is no avenue for a central government to share the prosperity of the whole for the common good.

Germany has reigned as the dominant mercantilist exporting to the other EMU nations, thereby enriching itself at the expense of the others. Now Germany is reluctant to take its boot off their necks and is imposing, along with the IMF, draconian austerity with the inescapable results - high unemployment especially among the youth, severe human hardship, falling GDP, and increasing deficits. The political unity once expected from the monetary alliance has not yet developed and might be threatened by increasing civil unrest.

The antidote to the depression is expansion of the monetary base to employ the unemployed. The European Central Bank, which issues the euro, could issue euros (the equivalent to mining gold) to relieve the crisis, if its charter permitted it. Such action would tend to be inflationary in regions of nearly full employment. Germany, having suffered the Weimar hyperinflation, will have nothing to do with the slightest hint of inflation.

So far, the ECB has kept the lid on debt defaults by purchasing member state bonds to keep interest rates from exploding disastrously as only a central bank can do. However, its charter and Angela Merkel are making sure that it can’t do more. The EMU states may muddle through after a long time, if civil unrest does not intervene Arab-spring style or worse.

You rightly observe that there is little difference in the plight of EMU states between those with conservative or liberal governments. Neither has much policy discretion, and like here in the US, the difference between conservative and liberal economics is the intensity of their devotion to austerian dogma. They are both basically and unfortunately neoliberal.

As one who has put religious myths in proper perspective, you might enjoy ongoing efforts to do the same with economic myths that are causing worldwide suffering and forestalling progressive objectives.

References:

http://neweconomicperspectives.org/2012/12/deprogramming-progressives-indoctrinated-into-supporting-austerity.html

http://macrobits.pinetreecapital.com/tag/euro/

http://www.nakedcapitalism.com/2010/08/guest-post-modern-monetary-theory-%E2%80%94-a-primer-on-the-operational-realities-of-the-monetary-system.html

http://www.modernmoneyandpublicpurpose.com/blog.html

http://www.alternet.org/story/155040/the_truth_revealed_about_debt_and_deficits?page=0%2C0

Representative Pearce is Confused

This post was printed as a letter-to-the-editor in the Albuquerque Journal North twice. First on Wednesday, Dec 26 with the title Pearce Wrong on "Printing Money" and again on Sunday, Dec 30 with the title Rep Pearce Gets Money Lesson. Either the Journal staff really liked it or, more likely, they were just confused. Thanks to the Journal for the exposure!

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On the Journal's Nation page for December 22, Michael Coleman quotes Representative Pearce as saying "...we're just printing money because we can't even borrow it. Somebody needs to say this is ludicrous."

Confused

Representative Pearce's statement is shockingly ludicrous. Presumably, Pearce is referring to the Federal Reserve Bank buying US Treasury and mortgage backed securities. He and others, who refer to this action as printing money, apparently forget that the securities were purchased previously by drawing down bank reserves on the part of banks or their clients. When the Fed purchases these same securities, bank reserves are restored as the Fed takes possession of the securities. It is merely an asset swap. The net effect of the swap is that interest is paid to the Treasury instead of to the former holders of the securities in the private sector.

The second part of the quote, that we "print" this money "because we can't even borrow it" is equally ludicrous. Where does Pearce get the idea that we can't borrow money - that is, sell treasuries to the non-government sector? Even at historically low interest rates, Treasury securities are being purchased at every Treasury auction. In fact, such auctions never fail. In purchasing Treasury securities banks are just trading reserves, which earn little interest, for securities that earn more interest. It is just another asset swap.

Pearce's ludicrous statement implies that he thinks buying securities with "printed" money is equivalent to selling securities. Of course, the two operations are the opposite.  The first increases bank reserves; the other decreases reserves.

Representative Pearce's confusion is representative of the confusion of the nation's leaders. It leads to self contradictions and poor solutions to our economic problems.

Connecting Modern Economics with Progressive Politics

Connecting Modern Economics with Progressive Politics

As Los Alamos scientists and engineers working on nuclear weapons, our sole interest was accurately defining the problems and researching, developing, and implementing workable solutions.  Our jobs involved objective assessment of situations, separating the wheat from the chaff, and bringing people together with the right skills to fix problems.   Politics never entered the problem solving processes.

In retirement, several longtime Los Alamos colleagues and friends concerned over the political “wars” in Washington preventing us from addressing Climate Change began discussing how we might contribute to a solution to get our country moving in a positive direction.  We believed we had the right credentials and technical knowledge to address the issue and wanted to find some way to influence our elected officials.  Needless to say, we have not been successful!

Along this path, Dan started digging into economics to see if there was an economic component to the climate change issue that could make the argument for addressing carbon emissions more compelling to our Congressional decision makers.  In the process he found that economic issues were the most important consideration in almost every issue our country faces. 

Dan discovered a group of academics advocating an approach to Macroeconomics called Modern Money Theory (MMT) that is more an explanation of the way a sovereign’s fiat currency works , if unencumbered by needless restrictive legislation, than it is a theory.   

Needless imposed legislative constraints, like the “debt ceiling“ and the obsessive fear over an expanding “national debt,” are causing law makers to make unnecessary and destructive budget cuts that are killing jobs, hurting our economy, and preventing our government from investing in almost every phase of our national public service needs, including now urgent climate change issues.

Unfortunately, both Republicans and Democrats have fallen into the trap of believing economic myths driving our governments decision making in the wrong direction: “our federal government’s finances are no different than a household’s finances, it is going broke, it needs to increase tax revenue or borrow money from China to support our national debt, and it must make major cuts to our safety net programs to survive. “  

All of those often repeated statements are wrong, yet they are so firmly entrenched in our current culture that peoples’ eyes glaze over when they hear anything that conflicts with these myths.

Most people do not understand macroeconomics on any level, but conservatives purposely trumpet these myths to achieve their ideological small government, privatization agenda.  Claiming our government is running out of money is literally the only way to get citizen voters to accept cuts to our social safety net programs as necessary to prevent our country from going bankrupt.

Our challenge is to find better ways to communicate to all citizens, public policy makers, and advocates of progressive policies the message of how money and our banking system really work and the key role the federal government plays in sustaining full employment for all those wanting work.

 

Arguments for saving Social Security, Medicare, and Medicaid from destruction and making the necessary investments to improve our “public common good” would be enormously strengthened by an understanding and integration of MMT principles into our discussion of all the critical issues of our time.

My hope is that others will join us in this quest!

Fiscal Cliff is Great Drama and Bad Economics

We recall the “Fiscal Cliff,” or more appropriately the “Austerity Bomb,” is a sequel to the summertime drama created around the “Debt Ceiling.” All this drama is founded on irrational fear of federal deficits and the resulting increase in national debt. The Austerity Bomb is draconian by design and portends both tax increases and reduced government spending to an extent agreed by almost all to throw the country into another recession. 

Bad economics; bad result.

The fear stirred up by the “Deficit Hawks” is that interest rates on the national debt will increase dramatically because of national insolvency produced inevitably by a large deficit. Meanwhile the “Deficit Doves” tell us that we will have to reduce the deficit in the future, but now is too soon. And, the wise “Deficit Owls” know that there is no solvency risk for a country with its own sovereign fiat money and that deficits, the debt and their ratios to GDP will decrease when the nation gets back to full employment, which federal deficits can hasten.

At the moment, it doesn’t matter who is right. The drama is set up to play out as the script has been written in recent months. President Obama campaigned hard for reelection insisting that taxes on the rich must be increased while those on the middle class remain untouched. His reelection now demands that he follow through on the tax hike or face ridicule for not being tough enough.

On the other side, all elected Republicans depended on campaign funds contingent on their pledge to Grover Norquist never to support tax increases.

For the President to get the tax hikes he needs in some "Grand Bargain," Republicans must renege on their pledge. They will only do that if there is a prize greater than assured campaign funding. Such a prize would be the ultimate Republican goal of getting rid of the great Democrat legacies of Social Security, Medicare, and Medicaid or, at least, cut a lot of webbing from these safety nets, which they demean as “entitlements.”

Will the President get his tax hike? Will the Republicans weaken our safety nets? Will the Austerity Bomb detonate ruining the economy? Will Republicans realize that that the Norquist pledge is not in the best interests of the nation? Whatever happens, the drama will be intense and the outcome detrimental to the economy. Any outcome is programmed to produce too much austerity too soon.

The owls know that increased deficits are symptoms of the disease of unemployment and that increased government spending and/or tax relief will enable private consumption and job growth. That approach is foreclosed by the neoliberal economic prescription that dominates the world today. That is, to resort to medieval bleeding rather than nourishment.

Professor Bill Mitchell comments on austerity in the UK:

"By failing to acknowledge that when non-government sector spending is insufficient to drive economic growth at levels sufficient to reduce unemployment there is a need for increased discretionary government net spending to support growth, the British government not only is creating an increasing economic malaise but failing to achieve its own (mindless) targets – a reduction in the deficit and outstanding public debt. The lesson is that fiscal austerity is self-defeating on all counts – the things that matter (the real economy including unemployment) and the things that don’t matter (financial ratios)."

At risk is the prosperity of the middle and lower income classes, as has been the case for at least three decades. The same people denied a reasonable share of the prosperity that increased over these years will suffer the reduced benefits in the offing because of deficit and debt hysteria. Had their incomes increased in proportion to the increased wealth acquired by the upper classes, the base for payroll taxes would have increased and the safety-net funding would have been much better. We might call that the double whammy of neoliberal economics.

So we see the fiscal-cliff threat for what it is; high political drama to convince the masses to accept political decisions detrimental to their own best interests. Our problem going forward is not that our deficits will be too large but that they will be too small.


Related Reading
Even a deal on the budget is bad for the American economy
Franc Thoughts on Bond Vigilantes

Austerity is no answer!

The Peter G Peterson Foundation, in a futile attempt to reduce federal deficits, is investing in a big program to promote austerity, which demands reduced federal government spending. Unfortunately, the program has a high probability of being implemented, because many pundits, politicians, and a few economists seem to like the idea.

Austerity deprives the private sector of dollars, which reduces household demand for products, which, in turn, reduces the incentive of private industry to invest. This fatal attraction to austerity during recovery from a depression has afflicted the euro zone and the misdirected economies of Britain, Australia, and Japan. We don’t have to repeat those mistakes, and we must not.

The allure of austerity comes from the old, gold-standard view of money. In this old view, before government can spend, it must first acquire money from the private sector through taxation or borrowing.

From this gold-standard regime came the present-day myths, "Government must balance its budget just like a household," “national debt is a burden on our grandchildren,” and “international bond markets will not want to buy our debt.”

The new way money operates in our economy began when we went off the gold standard, which was finalized with the demise of the Bretton Woods Agreement in 1973. The modern US dollar is fiat money with a floating, foreign exchange rate. As a consequence the real value of the dollar depends not on the arbitrary value of a metal dug out of the ground but on our nation's productive output. That is something that can neither be taken from us nor given to us. It depends on our own hard work and stewardship of our economy. 

Dig money from the ground? Better to use the effort to build a school or bridge.

The modern dollar changes everything. A sovereign country that issues its own fiat money with a floating exchange has no economic reason to tax or borrow from the private sector to acquire money. Instead, government creates the dollars necessary to purchase goods and services from the private sector. These purchases put dollars into the private sector by the amount of government spending minus tax revenue. Yes, deficit spending increases the financial assets of the private sector exactly to the dollar of the deficit. This, of course, raises the question of why we tax at all.

Taxation creates demand for money issued by the government, takes dollars out of the private sector to avoid inflation, and provides a means of wealth redistribution from the rich to the poor.

In what is called borrowing, government sells Treasury bonds to provide a means for risk-free preservation of private financial assets and a way for the government to balance reserves in the banking system. Banks gladly use their reserves to buy bonds, which provide greater interest. The process is just like a household taking money from a checking account to buy a Certificate of Deposit.

Our US economy, measured by gross domestic product (GDP), depends on the sum of household consumption, business investment, government spending, and net exports. As we are a net importer, net exports is a negative number. So, consumption and investment must usually carry the load, but each depends on household willingness to go buy things. Business will not invest more in the means of production unless there is consumer demand for things, and households will not buy things unless they have money to spend.

Contrary to common assertions, in the absence of household willingness to buy things, no amount of lower taxes or reduced regulations will induce business to invest. Household demand drives GDP.

In an economic downturn, such as we have experienced since 2008, when consumers are cautious about spending and business investment is waiting for customers to return, fiat money provides a solution.

The federal government can deficit spend to maintain GDP and increase employment by investing in the future. Such investment might include infrastructure (transportation, utilities, and education), new means of energy production, and scientific research and development. The government can never spend too much money as long as there are unemployed people and equipment that can be put into  production.

Those who promote austerity assert that federal deficits will increase interest rates and burden our grandchildren with increased national debt. They are wrong.

Interest rates are set, not by the “market,” but by the central bank in any sovereign country with floating-rate, fiat money. Our grandchildren will inherit both the interest-bearing bonds that constitute the so-called "national debt," and the means of production embedded in a modern infrastructure. 

Austerity reduces GDP, increases unemployment benefit costs, and increases the deficit by reducing employment of our productive resources. We should not keep any resources on the sidelines; we need to keep them all working and producing.

Related Reading:
Pete Peterson Has Won
Lerner on “The Burden of the National Debt”
Unemployment is a misallocation of resources

Our Grandparents Knew Better

We see the results: high unemployment, the collapse of the middle class, more children in poverty, outrageous wealth inequities, declining opportunities for both jobs and education. We are experiencing the result of four decades of conservative, neoliberal domination of our economic agenda that has been advanced by both political parties. After simmering for years, the breakout came when Reagan declared, "Government is not the solution; government is the problem." He was wrong - dead wrong.

Our grandparents understood what we have forgotten. They understood the role of government in the economy. And, they understood that the economy is not all about money; it is about productive capacity. They understood that government spending puts financial assets into the private sector. So, government can spend in a manner that is counter-cyclical to the business cycle to maintain a healthy economy.

In recent decades we have become burdened not with unsustainable public debt but with the myth that government finances are the same as those of the household. Where once we could afford, as a nation, anything we could actually do (moonshot); now we can afford very little, because we don't have enough money, which is asinine. We think that we can only do what we already know how to do (drill, baby drill). Then we must relax environmental standards and financial regulations to make our efforts more profitable. We fear opening new horizons, because we can't afford them.

We have been duped! Our elder statesmen tell us we are burdening our grandchildren with debt, and that increasing deficits are caused by too much government spending. The truth is different. Government spending enriches our grandchildren and deficits are caused by too little production. Thus, we have been frightened into accepting economic conditions contrary to our own best interests, but quite acceptable to the elite 1%.

The scales will be tilted toward the elite 1% until we citizens of a great nation realize the following simple truths that our great productive capacity affords us.

    •    We can assure a decent standard of living for our elderly.
    •    We can provide health care for all our citizens so that no family need become impoverished by adverse health issues.
    •    We can educate our youth to provide a highly capable workforce in support of an entrepreneurial society.
    •    We can assure opportunities and prosperity for all industrious citizens.
    •    We can regulate our financial institutions so that they can not "stack the deck" against their own customers.

In short, we can do anything we put our minds to once we again accept the idea that we are a "can-do" society. We have lapsed into a "can't-do" society, because we have been duped by false economic myths perpetrated by a wrongheaded, neoliberal economic ideology. 

Related Reading
New Sense - Common Sense

The Deficit is Uncontrollable!

There is a very important macroeconomic accounting relationship that is so simple it boggles the mind. Yet many economists disregard it or think people are too simpleminded to understand it. With understanding we all might become better informed than most pundits and politicians.

The accounting relationship merely states that if any country has a foreign trade deficit, which means that it imports more than it exports, that country consequently will have a matching deficit in its domestic economy. This happens because imports cause money to flow from domestic bank accounts into foreign bank accounts.

Accounting matters.

Someone might reasonably ask, “So what?” The answer lies in realizing that the domestic economy comprises a public sector and a private sector. So, if a foreign trade deficit exists, one or both of the domestic sectors will incur a deficit. We discus below that the public deficit depends in large part on how much the private sector decides to save and import. The deficit can not be determined beforehand.  Accountants can always figure out what happened but not what will happen, because government has no control over private decisions.

When a sector is in deficit, that sector incurs increasing debt. But, there is a significant difference between the debt incurred within the private sector and and that in the public sector (federal government).  Increased debt in the private sector means increased bank loans. Deficits in the public sector contribute to the so called “national debt,” which results in more treasury holdings, which are risk-free savings instruments, in the private sector. 

In the late 1990’s, our government ran surpluses that most people thought was a good outcome. They didn’t realize that, if the public sector ran a surplus, the private sector would consequently have to run a deficit. In fact, there began a decade-long period of increasing private debt due to increasing foreign trade deficits and inadequate public deficits.

Of course, as it turned out, the mounting private debt exacerbated by unscrupulous financial practices all came to an abrupt halt at the start of our current economic crisis. Since early 2008, the private sector has been saving and, therefore, has been in surplus like never before. Consequently, the public sector is forced to incur the debt necessary to match the foreign trade deficit as well as the extraordinary private saving. Private decisions to save and to import can affect the deficit more than public policy. Those private decisions, like buying foreign cars or saving more of discretionary income, which are beyond government control in a free society, make the federal deficit impossible to control.  

Because the deficit is uncontrollable, it is bad policy to attempt to control it by reducing public spending, which only serves to increase unemployment that, in turn, leads to higher public deficits. We need something like a speedometer on a car that allows us to monitor the performance of the economy. Unemployment and productive capacity work together as such a speedometer, because unemployment and productive capacity are basic to both inflation and GDP growth. 

As a matter of policy, we should try to control what we know how to control instead of something that is inherently uncontrollable. The need to balance the federal budget is a myth promoted by those, who benefit from private sector debt. We need less not more private debt to benefit the whole economy.

When government spends responsibly by investing in job creation programs like infrastructure modernization, public education, and science and technology research, it can reduce unemployment and grow GDP while at the same time improving the public good. The deficit will then take care of itself by reducing its size relative to GDP. 




Thanks to Duane for help on this post.

Bill Clinton is still bragging about his surpluses!

Because presidential elections turn on the economic condition of the country, we might expect candidates to know something about the subject of economics. Apparently, neither they nor their advisors know very much.

As lovable Bill brags about running government surpluses, we might ask a couple of obvious questions. 

Why should the government run a profit?  And, from whom does that profit come?  That profit comes from household money. It doesn't make sense for the government to compete with private industry for profits, does it?

It makes more sense, particularly during recessions, for the government to run deficits, which put financial assets into households. That helps maintain household spending, which is the main driver of our economy.

Bill Clinton should stop bragging about his surpluses, they did more harm than good. Unfortunately, Obama and Romney both fail to see the inevitability and virtue of deficits.