Reply #43: Keynes advocated spurring growth through deficit spending

[IrateCitizen]

His theory was based on the belief that the private sector could not adequately respond to an economic downturn in time, so it was the role of the government to jump-start the economy through massive spending. This, of course, would cause a quick and hefty deficit. However, Keynes also believed that in times of strong economic activity, the government should run a surplus, saving excess capital for when it needed it to head off a downturn.

Such a policy would probably do us good right now, at least according to The Nation columnist William Greider. If massive amounts of capital were pumped into public works to upgrade our transportation network, electrical grid and crumbling educational infrastructure, we could probably shake loose of the current slump. And even if it didn't completely work, at least we'd be left with an upgraded national infrastructure (rather than throwing money away on wasteful weapons system and high-bracket tax cuts). But it would require running short-term deficits even higher than those anticipated under the Bush administration, something that no Democrat is willing to do right now, as the Democratic Party has really become the party of fiscal austerity and balanced budgets.