Running budget surpluses is a drag on the economy-- the reasoning is included in the basic Keynesian, Econ 101 model.
If I had to explain the current expansion in a few sentences, I would attribute it to (1) the stock market bubble which generated some trillions of dollars of wealth and therefore hundreds of billions in demand from those enriched and (2) major change in Fed policy 5 and a half years ago, when they abandoned the 6 percent NAIRU and allowed the unemployment rate to fall to 4 percent. There was also a certain amount of gross investment associated with the "new economy" changes, altho I don't think investment changed increased much as a share of GDP over the course of the expansion, and of course much of that investment will turn out to be waste as the dot-com bubble deflates.
Mark
At 01:14 PM 1/5/2001 -0500, you wrote:
>alex lantsberg wrote:
>
>>-----Original Message-----
>>Both Congress and the executive branch should
>>abandon the
>>extremist and groundless economic theories, which
>>we could tolerate while
>>the economy was booming, that advocate paying off
>>the national debt over
>>the next 12 years. A commitment to pay down the
>>debt is a commitment to
>>reduce demand and slow the economy at a time when
>>we really don't know
>>where the bottom of the current economic slowdown
>>is going to be.
>> ----
>>what's the reasoning behind that statement?
>
><weisbrot at cepr.net>, who's cc'd on this.
>
>If you're going to make this argument, you have to explain why the
>U.S. economy grew fairly briskly for years while the deficit was
>being turned into a surplus.
>
>Doug
Name: Mark Weisbrot E-mail: <weisbrot at cepr.net> Co-Director Center for Economic and Policy Research 1015 18th Street NW, Suite 200 Washington, DC 20036 Phone (202) 293-5380 x228 Fax (202) 822-1199 (202) 333-6141 (home) www.cepr.net