Or it can spend money on government projects such as education, saving distressed corporations, and constructing highway and bridges.
These strategies do not help pay debt in the short term, but a growing economy can permanently reduce debt in the long term.
Although there is little evidence that the rich are creating new jobs with the money saved by Bush tax cuts, government stimulus projects seem to be working well. Europe’s reaction to the bad economy was to ignore stimulus and cut spending to retire debt. Now all of Europe is sliding into an abbess. Great Britain is suffering the first double-dip recession by a major economy in 40 years.
The weakness in U.S. employment numbers is rooted in losses in the public sector.
Gutsy public investment in education and infrastructure can expand our success compared to the rest of the world and eventually allow us to grow out of debt.