Following an earlier post on deficit spending, Harvard economics professor, Martin Feldstein, Chairman of the Council of Economic Advisors during the Reagan Administration, weighs in with this op-ed in the WSJ (subscription required). In parts of his op-ed, Professor Feldstein observes as follows:

Although fiscal deficits impose a burden on future generations, it would be wrong to respond now with a tax increase. Raising tax rates would hurt the expansion and weaken the incentives that drive long-term growth. Rescinding the Bush tax cuts on high income individuals would not only be economically counterproductive but would also have little effect on future budget deficits. A 15% increase in the taxes of those with incomes over $200,000 (e.g., taking the 35% top rate back to 40%) would reduce future budget deficits by a mere three-tenths of 1% of GDP aside from the adverse effect on long-term growth.
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The medium-term goal for U.S. fiscal policy should, at a minimum, be a constant or declining ratio of debt to GDP. Achieving that goal requires bringing the deficit down to about 2.5% of GDP or less. Recent analysis by the Congressional Budget Office indicates that there is ample time to decide whether more is needed to achieve this than tight controls on spending. The low interest rates on long-term bonds also show that the participants in financial markets have confidence that future deficits will be coming down.
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Shrinking the deficit to a level at which the debt is no longer rising faster than GDP will require tight spending controls or GDP growth at a faster pace than in the past 10 years. There is no reason to consider a tax increase at this time. The big budget challenges for the years ahead are to continue the tough controls on discretionary domestic appropriations, to use the defense transformation to limit the budget outlays for national security, and to start the reforms of Social Security and Medicare that will be needed to avoid a budgetary explosion when the baby boom generation begins to collect retiree benefits.

Richard W. Rahn, an adjunct scholar at the Cato Institute, writes an excellent Wall Street Journal op-ed (subscription required) today on deficit spending. During political campaigns, no other economic policy is subject to more demagoguery than deficit spending. Contrary to the rhetoric of most politicians, deficit spending is not inherently bad and, in some cases, absolutely essential. As Rahn points out:

As long as individuals or businesses have a yearly rise in income, they can take on more debt without getting into trouble, provided the cost of the additional debt service does not rise faster than the rise in income. The same is true for government. Forty years ago, in 1962, federal government debt as a percentage of GDP was 43.6%. It fell to a low of 23.8% in 1974, rose to a high of 49.5% in 1993, and then dropped back to 33.1% in 2001. Currently, it is about 35% of GDP, and the CBO projects it to fall back to 30.7% in 2013.
At the end of World War II, U.S. government debt was more than 100% of GDP. That level of debt was borne by the generations that came after the war, but clearly we are all better off because the war was won with debt financing. We are also better off because the Reagan administration engaged in a military buildup, financed partly through increased debt, to win the Cold War. Placing a debt burden on future generations is not wrong if it is done to help secure their liberty and prosperity.

Amen!