[jeffkrol]

I know it is an oxymoron... but THIS example gives you an idea of the IDIOTS in Congress or idiots that want to be in Congress (note though: Even the correct answers are "slightly" wrong..

PolitiFact Wisconsin | Uncle Sam's borrowing leaves less for businesses, GOP Wisconsin Senate candidate Mark Neumann says

Americans have heard many times that Uncle Sam’s borrowing puts a terrible burden on their children and grandchildren, because they’re the ones who will have to pay the money back someday.
But former congressman Mark Neumann, a Wisconsin Republican running for U.S. Senate, contends the borrowing has a pernicious present-day effect as well.

In a June 13, 2012 radio interview, Neumann said that if the federal government didn't borrow $1.2 trillion every year "to fund government operations," that money would be available "for entrepreneurs and business people to put to work creating jobs and building and expanding their businesses."

[B]]Really?
There’s essentially one pot of money out there and every time the federal government sticks it beak in, there’s less for private businesses -- even with interest rates at near-record lows?[/B

Neumann’s case
Here’s the relevant exchange between Neumann and talk show host Mitch Henck of WIBA-AM (1310) in Madison.
Henck: "We need something bold, don't you, to get this economy going?"

Neumann: "Well, I think balancing the federal budget so that the federal government stops borrowing $1.2 trillion out of the private sector is going to help our economy immensely. When you think about the federal government taking $1.2 trillion out of the private sector to fund government operations, you can see what's wrong with our economy."

Henck: "Aren't they taking that from the Chinese? They're borrowing that money, aren't they, Congressman?"

Neumann: "They are borrowing that money and that's the point exactly. If they did not borrow that money, that money would be available out here in the private sector for entrepreneurs and business people to put to work creating jobs and building and expanding their businesses.................

Other views

We asked five experts about Neumann’s argument.

"This is a fairly straightforward, almost master of the obvious-type statement," said J.D. Foster, senior fellow in the economics of fiscal policy at the conservative Heritage Foundation in Washington, D.C.

Money is loaned first to the U.S. government because it is considered "the riskless borrower," and the money the U.S. borrows isn’t available to others, he said.

OK, the same dollar can only be loaned one time. But does U.S. borrowing, as Neumann claims, leave less money for businesses?

Not according to the other experts.

"The U.S. government and American entrepreneurs are not running after the same pool of money," said Abdur Chowdhury, chairman of the economics department at Marquette University in Milwaukee. The U.S. borrows largely from overseas -- by selling securities -- while domestic businesses borrow mostly from domestic banks, he said.

The notion that the amount of federal borrowing limits money available to be loaned to businesses "is absurd on its face," said Dean Baker, co-director of the liberal Center for Economic and Policy Research in Washington.

"Every single measure of the interest rate (Aaa bonds, Baa bonds, mortgage loans, car loans etc.) is lower today than at any point in the (George W.) Bush administration," he said by email. "If government borrowing were pulling money away from businesses, it would be by pushing up interest rates."
Barry Bosworth, senior fellow in economic studies at the Brookings Institution in Washington, agreed. Neumann’s statement "makes little sense right now because the basic problem is the opposite -- no one wants to borrow, and hence interest rates are near zero. If we could get more people to borrow and invest, the economy would quickly recover," he said.
Bosworth, a former adviser to Democratic President Jimmy Carter, said Neumann’s claim might have been true prior to 1970, when "capital markets were closed at the borders." But since the 1990s capital markets are global and U.S. government borrowing doesn’t "crowd out" businesses seeking capital, he said.
Andrew Reschovsky, professor of public affairs and applied economics at the University of Wisconsin-Madison, said that among other reasons, Neumann is proven wrong by "basic economics."
Increased federal borrowing should increase demand for money and raise interest rates, which would discourage businesses from borrowing, but interest rates have been at or near historic lows, he said.

[Wheatfield]

When governments borrow money, don't they then spend it on stuff that employs people? Even welfare payouts put money into the hands of grocery store clerks.
Borrow money for a war, and you are employing an army, and buying munitions and war machines from companies that manufacture the stuff.
Why do these people consider government borrowing to be some sort of black hole?

[boriscleto]

Why do these people consider government borrowing to be some sort of black hole?

They have been lying so long that they actually believe the lies.

[stanislav]

When goverments borrow money, it is just another word for raising taxes!

They make the value of the money lower (which is a sort of tax) and then spend that money which means that someone is earning that money.

IMHO it would be much better to increase the taxes to the sustainable level rather than hiding taxation through this "borrowing" acts.

[jeffkrol]

When goverments borrow money, it is just another word for raising taxes!

They make the value of the money lower (which is a sort of tax) and then spend that money which means that someone is earning that money.

IMHO it would be much better to increase the taxes to the sustainable level rather than hiding taxation through this "borrowing" acts.

the Fed doesn't have to tax anything to spend money.. urban legend.............
Look at the Iraq/Afganistan war "tax"..... opps no such thing..........