We're basically pretty much all the way through the private sector deleveraging following the financial crisis, but we're now in the mode of public sector deleveraging and you don't want to move to that too quickly or else you're going to exacerbate our unemployment problems.
We need to be coupling deficit reduction that's delayed in its implementation with more upfront investments. It makes little sense for us to be tolerating an elevated unemployment rate when our 10 year bond yield is well under 2% and there's huge needs in this country.
In essence, with rates so low, government should be borrowing heavily and investing in the economy.
The problem I have with government "investing" is the simple fact that the "investor" doesn't have sufficient skin in the game. At least not the skin you and I generally associate with investing. Political skin yes. That is, policymakers are politically motivated, as opposed to profit motivated. The loss the politician is concerned with is not the loss of money should he miscalculate (normal investment risk), but the political loss should he not propose bold new job-producing projects. And, sadly, investments undertaken without a legitimate (in a tangible sense) profit motive---without the care and due diligence one risking his own capital would undertake---will never yield the social advancement their advocates would promise.
You see, to earn a profit one must receive more than one invests. The business owner, if he's to remain a business owner, must sell his wares for more than their production costs. If he's to compete he must profitably allocate a portion of his revenue toward innovation, toward efficiency, and toward keeping his employees content enough to not be enticed into going to work for the competition. The freer the market, the greater the competition, the faster the advancement of the working class, the better the economy for all.
The fundamental cause of poverty (among the able-bodied) is lack of (for lack of a better term) exploitation. Overly-generous welfare and unemployment payments (you and I may disagree with that characterization based on the lifestyle impact of benefits received, but can you argue that benefits are not "overly-generous" when they're paid
We're $16 trillion in debt, not for lack of revenue, but for lack of profitability. Unemployment remains stubbornly high and the welfare rolls have tripled over the past few years, not for lack of desire by would-be employers, but for lack of profitability. Rather than their energies being harnessed by profit-seekers---rather than realizing the material and emotional benefits that come from putting in a day's work---millions of individuals are being exploited by politicians.
In fact, allow me to correct myself: The fundamental cause of poverty (among the able-bodied) is indeed exploitation---the exploitation of the individual by the politician (from both sides of the aisle mind you).