While explaining (yet again) why household budgets are not the same as national economies, heterodox economist L. Randall Wray observes:
The United States has … experienced six periods of depression. The depressions began in 1819, 1837, 1857, 1873, 1893, and 1929. (Do you see any pattern? Take a look at the dates listed above.) With the exception of the Clinton surpluses, every significant reduction of the outstanding debt has been followed by a depression, and every depression has been preceded by significant debt reduction. The Clinton surplus was followed by the Bush recession, a speculative euphoria, and then the collapse in which we now find ourselves. The jury is still out on whether we might manage to work this up to yet another great depression. While we cannot rule out coincidences, seven surpluses followed by six and a half depressions (with some possibility for making it the perfect seven) should raise some eyebrows. And, by the way, our less serious downturns have almost always been preceded by reductions of federal budget deficits. I don’t know of any case of a national depression caused by a household budget surplus.
Politicians who use the debt and deficit as an excuse to slash the budget are simply utilizing a convenient excuse to advance an ideological small-government agenda, not a real economic plan. It has nothing to do with the realities of fact-based macroeconomic policy.