Some economists argue that the federal government should normally run a deficit at potential GDP, with the borrowed funds applied to

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Economists argue that the federal government should normally run a deficit at potential GDP, with the borrowed funds applied to investment goods. This is because investment spending has a multiplier effect on economic growth and can help increase potential GDP, leading to higher future tax revenues that can be used to pay off the debt. On the other hand, borrowing for consumption goods, social security benefits, health care costs or imported goods may have limited or no positive impact on economic growth and may lead to higher interest payments and debt burden in the long run.

Some Economists Argue That the Federal Government Should Normally Run