Follow up: is it realistically achievable ever again, and should it even be a goal to be concerned with?
In: Economics
In the old days, it achieved it by being small, and because to overspend our money meant economic disruption, because our money was backed by gold that could steadily leak out of the country. Less gold in the country meant lots of unemployment. More recently, in the late 1990s and early 2000s, by sharply cutting military spending amidst strong economic growth.
Whether it’s a goal worthy of achievement again is a really big question. One thing to note is that the USA has a tendency towards acquiring debt whether the federal government borrows or not. That’s because we pay out of the country more than is paid in, partly through trade, and partly through other means. The other side of that coin is that we have to then receive an equal amount of investment flowing into the country from abroad, as the countries that get dollars from us look to secure them as reserves by investing them in dollar-denominated financial assets. Most of that investment takes the form of debt.
So for example, in the late 1990s and early 2000s when we achieved a budget surplus, the nation as a whole actually *increased* its overspending relative to production. Since the government wasn’t borrowing, the mandatory inflow of investment had to find assets in the private sector to buy up. A lot of that was Dot Com stocks and, later on and to a much greater degree, American real estate debt. This would foment a couple of major economic crashes here in the USA when way too much capital flowed into undeserving industries.
Now, that’s not a given every time we cut the deficit. But as long as we maintain a *current account* deficit, meaning a net outflow of payments and a corresponding *capital account surplus,* meaning a net inflow of investment, we will acquire debt either publicly or privately. I would argue the government is a much better sink for the world’s capital than the private sector.
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