Good Deficits: Protecting the Public Interest from Deficit Hysteria (Part 2‪)‬

III. Good Deficits in the Short Run: Fighting Recessions Even some of the most adamant opponents of deficits concede that there is such a thing as a "good deficit." (76) The standard theory is that deficits are acceptable in the short run, if the economy is weak. Although even this basic wisdom has been drowned out in the current political atmosphere, it must be remembered that this point of view is absolutely the standard position among macroeconomists. (77) While one can argue about political aspects of deficit spending, such as whether delays of the legislative process will cause the deficit spending to be mistimed, there is very broad agreement that it is not only acceptable but wise to fight economic downturns with fiscal policy--especially if monetary policy cannot be counted on to push the economy back in the right direction. (78)