From: phoenix@ugcs.caltech.edu
Date: Fri Jan 22 1999 - 17:16:05 MST
> On Fri, 22 Jan 1999 16:14:17 -0500 "Alexander 'Sasha' Chislenko"
> >Why does the govt have to borrow then?
> In the simplest terms, the government needs to borrow when it spends more
> than it takes in, its cash balance being normally very small.
Why do corporations borrow? They hope they can make an investment with return
greater than the interest rate.
One oddity about the federal gov't is that it has no budget for investment.
Corporations and many state/local gov'ts do, making a distinction between
running expenses and long term investment, such as airports or water supplies.
If you buy a house with a $200,000 mortgage, you'd view that as taking a
$200,000 mortgage on your books, with payments going into future expenses.
The federal gov't would view that as buying a house with a $200,000 deficit
for that year.
So our children won't necessarily be paying for the excesses of their parents.
They could be paying for public investments which they'll have been using all
of their lives. It depends on what the borrowed money is spent on. (Some
people, of course, seem to think gov't investment is a logical impossibility.)
In my case, I feel I'll be paying for the defense excesses of the Reagan
years. But this accounting weirdness can offset SS being counted in the
regular budget.
-xx- Damien Raphael Sullivan X-)
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