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Money and Main Street
7 of 12
Balance the budget?
Question: "Is stimulus or balancing the budget more important for our country's future? It seems like consumers are being blamed for overspending and yet now the government wants to overspend its budget." -- Dominique Reneau, Conifer, Colo.

Expert: Garett Jones, associate professor of economics, George Mason University

Answer: "The U.S. ran massive deficits during World War II, much larger than we expect to see during this crisis. Yet the two decades after WWII were very good times for the U.S. economy. So large, temporary deficits are completely doable.

What matters is maintaining a commitment to repaying the debt - and for over 200 years, the U.S. government has never missed a debt payment. The U.S. government has broken a lot of promises to a lot of people, but it's never broken a promise to its debtholders.

Let's hope it stays that way."

Expert: David Laibson, professor of economics, Harvard

Answer: "There is a significant chance that our economy has entered, or will enter, a self-reinforcing feedback loop. For example, a decline in the value of the stock market causes households to rein in their spending, which causes businesses to lose sales, which causes the stock market to fall even further.

If such cycles continue, our economic problems may become even more severe. The stimulus package is designed to break such cycles. The package is desirable, even though the need for the stimulus and the effects of the stimulus are both not clear.

At the moment, it is better to err on the side of overreaction, given the scope of our current problems and the potential for them to get even worse."

NEXT: Government bankruptcy?
Last updated April 14 2009: 11:56 AM ET
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