Some decisions are hard and some decisions are easy. When someone offers you a thousand dollars on the condition that you pay back $900 in seven years, that’s one of the easy ones. But as Ezra Klein writes today, that’s the position we’re in right now. The federal government’s long-term borrowing rate is -0.34%:
Here’s what this means: If we can think of any investments we can make over the next seven years that have a return of zero percent — yes, you read that right — or more, it would be foolish not to borrow this money and make them.
….Our infrastructure is crumbling, and we know we’ll have to rebuild it in the coming years. Why do it later, when it will cost us more and we very likely won’t have massive unemployment in the construction sector, as opposed to now, when the market will pay us to invest in our infrastructure and we have an unemployment crisis to address?
….Everyone knows we have worthwhile investments to make. The real reason we won’t take advantage of this remarkable opportunity is ideology: Republicans argue that deficits are the only thing that matters for our recovery — unless anyone attempts to close them through tax increases, and then tax rates are the only thing that matters for our recovery. And Democrats have stopped even attempting to challenge them.
It’s true that this money still has to be paid back, and principal repayments are as real as interest costs. Still, we’re being offered free money. Only an idiot would turn it down.