Why the current level of debt not mattering matters

Last post, I went to some lengths to deflate some of the distortions in the popular "If the U.S. budget was like a household budget" meme.  The point of that was to try to put the discussion into a more useful context, and to point out that none of the bad things we'd expect if our debt was actually too high are happening.  However, some friends pointed out that none of that is any reason not to reduce the debt.  Presumably some good stuff will happen if we do since being in debt is "bad".  That would be fine, except that deficit reduction is anathema to many important policies that can and should be implemented under the current circumstances.

When you look at the national debate, the competing visions are basically stimulus & infrastructure programs on the "liberal" side and severe spending cuts on the "conservative" side.  Ignoring for the moment the fact that "conservatives" are preaching spending cuts as essential for deficit reduction while simultaneously promising to increase the deficit even more by lowering taxes on the rich, let us simply consider these arguments as "economic stimulus" versus "deficit reduction".

If the key priority is deficit reduction, then certain policies suggest themselves very strongly: reducing investment in our most expensive programs, curtailing aid to state and local governments, raising taxes, freezing federal payrolls, and maybe even liquidating obsolete or unnecessary government assets.  If the key priority is stimulus, then increasing investment in infrastructure, expanding or maintaining social safety net programs, and providing additional aid to state and local governments all seem pretty important.

I pointed out last time that none of the bad things we'd expect based on high debt are happening.  By contrast, tons of bad things we'd expect from a bad economy are happening: high unemployment, wasted resources, stagnant wages, and slow growth.

All the stimulus priorities cost money, so "deficit-hawks" are likely to object to them, and if we have bought into the idea that the deficit is indeed at dangerously high levels, it is much harder to override those objections.  Even if we did see evidence that our debt was dangerously high, we might conceivably want to pursue stimulative policies, but that would be a debate worth having.  The current debate is not worth having, and it is completely distorting our national priorities away from a genuine need towards an imaginary one.