The conservative obsession with deficits threatens to reverse much of the good the fiscal stimulus has done over the past 6 months. According to the orthodoxy, a country's economic health is directly related to it's level of debt. Except it isn't true. As Paul Krugman points out:
A couple of samples from today’s Times — not terrible examples, but illustrative of the prevailing conventional wisdom. David Sanger asserts that
the United States could begin to suffer the same disease
that has afflicted Japan over the past decade. As debt grew more
rapidly than income, that country’s influence around the world eroded.
Is that really true? I thought Japan’s influence has waned because
of its economic stagnation, its failure to maintain its status as an
economic superpower; I have never heard anyone cite the debt as a
central cause. Bear in mind that so far, at least, Japan has had no
problems financing its deficits.
It's worth banging the drum on this one, as conventional wisdom is often extremely hard to dispel, especially if there are huge incentives not to. Debt reduction is extremely useful for the rich and powerful as it ensures the state only spends money on them. They get to look fiscally responsible by lecturing the poor to 'pull themselves up by their bootstraps' while they raid the coffers to ensure their own success.
The corporate welfare state is wide and far reaching, starting from no bid contracts for tech and military companies to the limitless credit line for Wall St. It is one rule for the rich, and another for everyone else. Socialism for Haliburton and Goldman Sachs, and free market capitalism for small business and individuals.
The truth is, there's only so much money to go around, and heaven forbid those who actually needs it get any of it.