Somehow it's a common knowledge that debt is bad All kinds of debt, public, private and corporate. Every day you can see several articles crying: deleverage!
This is totally wrong. It's wrong for all kinds of debt. Reducing debt right now is bad for the country, bad for corporations, bad for the people.
First of all, reducing total national debt is bad for economy. All money is debt. Most people don't understand that, for details, look here: http://seekingalpha.com/article/178797-how-the-government-creates-money
Because money is debt, reducing total debt reduces amount of money in circulation. Which leads to low inflation, and in severe cases, to deflation. Well, many people, especially those living on savings and fixed income would tell me: what's wrong with the deflation? Our income can buy more things! True, but deflation increases cost of credit, depressing business activity. In severe cases (see Great Depression) high deflation leads to dozens of thousands companies closed, failed banks and very high unemployment. In the last hundred years, best growth was achieved in economies when inflation was between 2 and 5%. We are running around 1% right now. We need more inflation, more money, more debt.
Many people say that debt is a bad thing. It's almost from Christian church playbook of Dark Ages, when interest bearing credit was banned (usuty!). Economy was doing great in Europe between 7th and 13th centuries, wasn't it? In some Muslim countries credit is against the law, do they have good economies? Debt by itself is a good thing. It allows corporations to finance their expansion. It allows young people to start living comfortably, go to college, buy a car, a house. It allows government to pay for a lot of things, especially when economy isn't very good.
Word of the day: austerity. Why? Did anybody ever got richer by austerity? Did US escaped Great Depression using austerity measures in 1930-1932 or in 1937? You don't grow corporation using austerity, you don't grow economy using austerity. For people proper measure of debt is a relation between market value and debt. For a person it's a relation between income and debt. And for a government, GDP to debt. Ways to improve picture and grow in all cases is to increase income, not to cut expenses. I can understand austerity measures in Greece, where government sector was more than half of all economy. They need to cut budget and privatize like crazy. There isn't much room for privatization in US (USPS, ports and airports, anyone?) and government sector isn't that big. Main reason for US to take more debt: our government can borrow at outrageously low rate. If I could borrow at 3% for 10 years, I'd be loaded to the gills.
There is one more "reason" to reduce debt: someone sometimes will have to pay it. Well, corporations and governments can live many dozens of years with a big load of debt, just roll it over, preferably at good rates. And now is as good time to roll over debt as ever, at current low rates. Debt is only bad if you can't roll it over.
If we had booming economy, low unemployment and elevated inflation, I'd be first to call for debt reduction, especially government debt reduction. But we are in Great Depression 2.0, we need to pull our country (and the whole world, whether we want it or not) out of it. The only way to do it is to take even more debt.