Disaster relief in the form of low interest loans is not spending and reduces the deficit.
Edited on Thu Sep-01-11 02:58 PM by county worker
If you understand bookkeeping you know that a loan from you to someone is an asset because it is a receivable that will turn into cash at some point. On balance sheets assets are netted against liabilities or debt and the net difference is equity.
So if the government loans money for disaster relief it does not need to be offset with spending cuts because the loans are not spending. Rather they generate revenue from the interest on the loans and generate tax revenue from the spending on rebuilding. And they lower the defect by offsetting debt.
The repubs telling us that the aid needs to be offset by other spending is just another way to get their ideology in play.
If Congress would go on a loan program to create jobs it would really have the impact of offsetting the deficit by creating revenue in the form of interest received and taxes paid.
I think that is the idea behind the infrastructure bank. I hope it is anyway.
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