Deficit Dilemma

Inflation is when prices rise to absorb the money available.

   Some 15 years ago, Dick Cheney said deficits don't matter. Donald Trump agreed a year ago when he said government never has to default because it can simply print more money.
   Now, as the current president, he is attacking international trade deficits because, according to him, that means America loses. And to him, winning is everything.
   But while Cheney was talking about the national budget deficit, and the current flap is about international trade, economists point out that in either case, deficits don't matter.
   For one thing, over time, international trade always balances. It has to, because when one side runs out of money, trade stops. For another, while the U.S. may have a defect in the export of goods, it runs a surplus in services. No surprise here, since America is largely a service economy and other countries have lower labor costs so they can produce and export more stuff at lower prices.
   Also, Republican deficit hawks often abandon that principle when it's time to grant favors to big business supporters. In case you hadn't noticed, that's what's happening now. Washington bigwigs are touting tax cuts to boost the economy (which by the way doesn't need boosting at the moment) but the chief beneficiaries are corporations and investors, not workers.
   At the same time, defense spending is being increased, and most of that money will go to suppliers of stuff. It's not like enlisted personnel will be getting pay hikes.
   Meanwhile, the president plans to increase tariffs as a way to, in his mind, protect American industry and jobs. The reality is that the main beneficiaries will be corporations, while the added costs are passed on to consumers, who pay higher prices at retail.
   It's true that Democrats are more likely to indulge in deficit spending to jumpstart an economy when it needs some stimulus. And who better to do it than the federal government, because by doing so, the government simply owes the money to itself. But Republicans also do it when it's politically expedient.
   Over time, however, when the economy is doing well, government can and should pull back on some spending, since its support is not sorely needed and a healthy economy can rebuild the government treasury.
   That part is relatively simple. More sales mean more income and profit, thus more tax revenue to the government.
   Unless, of course, government cuts taxes so companies can keep more profit, even though that lower revenue puts the government deeper in the hole.
   So for all the ranting from deficit hawks when they're on the sidelines, when they find themselves calling the plays, "deficits don't matter."   
   By the way, simply printing more money may be an easy way for government to pay off its debt, but more money in circulation only inflates prices.