The Daily Mail's Jan. 19 lead editorial on stated that individuals in financial trouble make their problems worse by borrowing more at higher interest rates.
However, it is dangerously misleading to think this also applies to the U.S. Treasury.
The reason individuals have to pay higher interest rates is that additional borrowing raises the risk of default.
Despite the problems with the GOP/tea party and the fiscal cliff impasse, the Treasury sold $16 billion worth of 30-year bonds in November, at an interest rate of 2.75 percent. Buyers of long-term bonds know that Uncle Sam is safe.
With 7.8 percent unemployment, consumer demand is low and businesses are not investing in expansion. With much-outdated infrastructure needing to be replaced, now is the time for the federal government to borrow money and set people to work.
If we delay until the economy is in better shape, interest rates will rise, construction material will be more expensive, and the final cost even higher.
What recent events prove is that our modern economy is still subject to boom-and-bust cycles. Consumer and business psychology fluctuates between irrational optimism and unreasonable pessimism.
The government has the responsibility to be the flywheel smoothing out these fluctuations.
This requires government-led stimulus in times of recession and government and Federal Reserve restraint during booms. As the economy recovers, we need to reduce our annual deficits to maintain a healthy debt-to-GDP ratio.
At present the main danger is that politicians will over-emphasize balanced budgets.
Further in the future the main danger will be special interests that lobby for less restriction and regulation and for lower tax rates, etc.