Kent Conrad: “The Senator is correct. We had actually been in the happy circumstance of not only running a balanced budget, but…”

“The Senator is correct. We had actually been in the happy circumstance of not only running a balanced budget, but running a surplus. In fact, we had stopped the practice of taking Social Security trust fund surpluses to fund other functions of Government. It was critically important that we do that because we are getting close to the retirement of the baby boom generation. Some of our colleagues say to us that, you know, deficits don't really matter anymore. What a profoundly wrong notion that is. Obviously, deficits matter. When the Federal Government is compelled to borrow money, that puts us into competition with others who want to borrow money, that drives up the cost of interest rates, and that slows the economy. That is why when I reviewed this budget, it is not an economic growth budget, it is a budget that will hurt long-term economic growth because of the deadweight of these deficits and debt. That is not just my opinion. I will get to the point in the presentation where we talk about others who are economists who have been hired by the White House, by the CBO, to tell us the implications of what is being done; and what they have concluded is that this will hurt economic growth because it is all being financed by borrowed money. What does that mean? When the Federal Government borrows money, we are in competition with the private sector, and that reduces the pool of societal savings. That is a dissavings.…”