I don't like the federal budget deficit. And I mean that in almost every sense possible. I don't like it because it's bad for the economy, sure. But I really don't like it because it's bad for me. By which I mean it is an astoundingly boring and complicated subject that unfortunately allows people to sound righteous on a subject they don't know much about.
This goes for scores of political journalists who've already programmed their computers with a macro command to insert the words "soaring deficit" or "saddling our children with debt" into almost every sentence about George W. Bush.
I don't pretend to know a great deal about the deficit either. But here's what I do know:
First, it doesn't matter much politically. As Dick Cheney allegedly said, "Reagan proved deficits don't matter." I say "allegedly" because Cheney denies he said it and the only other source is former Treasury Secretary Paul O'Neill's book. But whether Cheney said it or not, it's politically true.
Think of it this way, if the economy is doing great then voters don't care about the deficit. If the economy is doing terrible then people don't care about the deficit - they care about jobs, the stock market, property values, etc. The deficit only really seems to matter as a source of an ill-defined anxiety about the future among the relatively well-to-do who really want something grave to worry about. Too bad we won't have another Y2K issue to occupy them until Y3K.
Now, economically, the deficit does matter, though how much and why it matters is the subject of a debate whose intensity is exceeded only by its dullness.
Still, there are some legitimate concerns. First, mounting deficits cause the federal government to devote more money every year to increasing interest payments. Second, they give foreign governments greater economic influence over our finances because we rely on them to buy our bonds. Third, since Uncle Sam is generally a better credit risk than almost anybody in the private sector, government borrowing steals capital from the private sector.
Now, because they are economists, economists disagree on these points and many others about why deficits matter. One caveat I should offer is that pretty much all economists agree that "cyclical" deficits are OK, while "structural" deficits are the real problem. Going into the red during a recession is necessary and good ("cyclical"), going into permanent, long-term debt is bad ("structural").