|Source: Liberty Pen-Professor Milton Friedman-|
Unless you're a very wealthy American, good luck finding someone who doesn't have at least some debt. Car payments are debt, mortgage's are debt, student loans are debt, business loans are debt, etc. It is not so much a question of whether a government, organization, or individual, carries debt, but how big of a debt do they carry relative to their income. Deficits, are one way you pick up debt. Simply by spending more money than you take in and for each year in a row you do that, the higher your debt is going to be. And depending on your ability and record of paying your debts, as well as the general health of the economy will determine how much interest you'll have to pay on you debts.
In the early 1990s, America had a recession of 1990-91, plus a high deficit and debt to GDP ratio. Meaning our budget deficit and national debt was high compared with our national economy. And as a result with weak economic growth and high unemployment to go on top of all of those issues, we had a pretty weak economy until 1994. President's George H.W. Bush and Bill Clinton, as well as two Democratic Congress's, addressed the debt and deficit in the early 1990s. Both in 1990 and 1993 and those two deficit reduction acts that had bod new revenue and budget cuts, as well as two major trade deals and the technology boom of the early and mid 1990s that we're really still in twenty-five years later, led to the 1990s economic boom. Where by 2000 we were actually talking about paying off the national debt. How times have changed.
In a perfect world where I've yet to visit or have seen, I would never want to run a deficit and debt unless the overall economy is weak. Generally speaking one of the last things you want to do is owe money to countries that don't have your best interest at heart and have those costs passed on to your taxpayers. But if you're economy is growing steady and your job growth is running steady and your deficit and debt ratios are relatively low, which means your interests rates will also be low and you'll have a strong currency as a result, you can run a small to moderate deficit. Just as long as you're managing your government spending properly and you keep deficit under control. And at the very least don't allow for it to grow faster than your economy.
Liberty Pen: President Clinton's 1993 Task Force on Deficits and Government Spending