Would stopping Irresponsible Government Borrowing avoid Recession?
No, It would make it worse. Firstly the US Government borrowing is irresponsible. There is no good reason for the US to have a national debt of $9,000 bn (65% of GDP) Alot of the debt is a result of irresponsible tax cuts for the rich by Reagan and Bush. These tax cuts did nothing to boost the long term potential of the economy. They just made the government’s fiscal situation worse. However, reducing government borrowing at this particular point in time would make the recession worse. If the government cut spending and increased taxes, it would reduce demand in the economy and lead to a further slowdown in growth. If the government didn’t have such a large deficit, they would be able to pursue a more expansionary fiscal policy which might actually help to avoid recession.
