I just heard John McCain, in an interview on CNBC, criticize our debt to China by saying we need to get rid of it via a balanced budget.
Our incredible foreign debt – most of which is based in China – is a problem. We owe a LOT, and we are now relying on countries, primarily China, taking even more to fuel our new spending. So I’m fine with the idea that we need to reduce debt.
However, has McCain ever studied history at all? The attempt at balanced budget in 1936 that led to the recession of 1937 (you know, the recession within the Great Depression)? What about the consumption tax increase in Japan in 1997 that killed off gains they made during the Lost Decade?
I learned that stuff over a 10 week macro econ class. You’d think a senator would be at least mildly familiar with that stuff (or that some of his staff would tell him about it.