Economists increasingly approve of U.S. taking on more debt for right reasons

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SAN DIEGO – Many top economists are coming around to the belief that it’s OK, even preferable, for the United States government to spend more money, even if it means increasing America’s $23 trillion debt. When thousands of economists gathered for the annual American Economic Association meeting this month, there were overwhelming calls for more – and wiser – government spending. Leading economic thinkers laid out the case that the nation will almost certainly have to spend more during the next recession, that major challenges such as climate change and inequality will likely require more money, and that the United States is significantly under-investing in infrastructure and education. "Even under current conditions, I think we can afford to increase federal spending or cut taxes to stimulate the economy if there’s a downturn," said Janet Yellen, the former Fed chief who is the incoming president of the American Economic Association. "Chronic low interest rates create additional fiscal space." Yellen’s remarks are part of a growing chorus of prominent economists who are building the intellectual case for the United States to take on a bit more debt. They are not saying that politicians have a blank check to spend more or that higher debt doesn’t have any negative consequences. The money still has to be paid back at some point – with interest. But the consensus view is shifting among economists from a belief that debt harms the economy to a belief that responsible borrowing is warranted. Yellen argued that the […]

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