Borrowing money a means to economic expansion

Should the government borrow in a recession to improve or increase the economy (versus save banks) and plan to pay it back later?

If government borrows money solely to increase the productivity and size of the economy, and if the size of the economy (as well as the debt) enlarges and remains enlarged afterward, is it then important to pay that debt back? Not exactly.

Does the enlarged economy provide additional taxes? Do the additional people employed reduce the cost of unemployment? Do the additional employed people, many of whom were insured against accidents and health by their employers, reduce the cost of government-subsidized health care? Did the money that the government borrowed to employ people get spent on permanent infrastructure such as roads, bridges, parks and buildings, and does the government therefore now have additional tax income plus assets in the form of infrastructure and cost savings from programs that offset or perhaps more than offset the cost of the borrowed money?

Then the borrowing becomes equivalent to an investment that pays ongoing returns and should be treated like a (depreciable) asset and repaid over its useful life.

We’ve all heard the concerns that the debt will become a burden on our grandchildren, but not this part of the debt. As to this part of the debt, a useful question to ask may well be: What will be the burden if we don’t borrow the money and don’t expand the economy and don’t employ the people?

Ev Senter