There's actually a huge problem with deficit spending. The money we borrow has to come from somewhere. To get it, the government issues Treasury bonds. Because foreign countries have been buying an awful lot of these, the majority of US Treasury bonds are held by other nations, mostly by their central banks.
Two very scary things could happen: those banks could decide to dump their dollars/bonds on the market, which would completely fuck the US economy; alternatively, they can just stop buying dollar debt. That latter possibility would cause the value of the dollar on the world market to seriously drop, and that would create huge inflation here in the US. We'd also take a huge hit on trade deficits (which we can't afford to do) and get to watch foreign nationals/countries buy up lots of US assets because their euros or yen or yuan or whatever are worth many times what they used to be when they buy American.
We sell most of our debt to foreign banks because they'll accept lower interest rates than private investors. If those banks demand higher interest rates, we're back to massive inflation.
So even though deficit spending itself may not be evil, when you couple it with the amount of debt we already have and the rather large trade deficit we've got, it becomes a matter of national security.
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Two very scary things could happen: those banks could decide to dump their dollars/bonds on the market, which would completely fuck the US economy; alternatively, they can just stop buying dollar debt. That latter possibility would cause the value of the dollar on the world market to seriously drop, and that would create huge inflation here in the US. We'd also take a huge hit on trade deficits (which we can't afford to do) and get to watch foreign nationals/countries buy up lots of US assets because their euros or yen or yuan or whatever are worth many times what they used to be when they buy American.
We sell most of our debt to foreign banks because they'll accept lower interest rates than private investors. If those banks demand higher interest rates, we're back to massive inflation.
So even though deficit spending itself may not be evil, when you couple it with the amount of debt we already have and the rather large trade deficit we've got, it becomes a matter of national security.