debt hysteria?

I’m not an economist, but I remember one of the most interesting things I ever heard an economics professor say. This was in private conversation in Chicago, in 1993 I believe.

What he said was that the problem was not so much the national debt, as the tendency to moralize the debt: “Bad country, bad country, owing money and not paying it back yet.” I would describe this economist as roughly a Walter Mondale Democrat. If memory serves, what prompted his remarks was the recently ended Ross Perot phenomenon; Perot, of course, was the king of moralizing the debt and the deficit.

I just thought of that now because of THIS ARTICLE, which refers to the current mood towards the debt as “collective hysteria.”

The USA now paying around 1.6% of the GDP in interest on the national debt, whereas under Reagan, Bush Sr., and Clinton it was often over 3%. (True, the percentage will increase if interest rates go up, but maybe they won’t.)

From what I can tell, we ought to be spending a heck of a lot more, not less– primarily on upgrading our decaying urban infrastructure.