John Spratt: “Let me wrap up and let us bring it to a conclusion because the gentleman has been in investment banking for the last 6…”

“Let me wrap up and let us bring it to a conclusion because the gentleman has been in investment banking for the last 6 or 7 years, and the gentleman knows that traditional economic theory for as long as we have known anything about it has held that deficits have the same effect that any supply and demand function has. The government goes into the capital markets. In addition to private borrowers, it elbows out the private borrowers. It runs up interest rates, and high interest rates stifle growth in the long run. So we may get a little bit of kick right now out of running a deficit, but in the long run we have got the debt to pay; it is a fiscal drag on the economy. Secondly, it is a form of dissaving. When the government borrows the money it is just like an individual borrowing money. He is dissaving rather than actually saving and that takes away from the savings pool that we have got for capital formation and building the productive assets of this country, and over the long run it means we are not as productive as we otherwise would be. Then, finally, there is a moral aspect, which I just mentioned. When we charge our excesses to the deficit, we are charging it to the next generation, namely, our children and grandchildren. No way around it. Everybody's recognized that moral aspect in the past. This is an intergenerational thing.”