A government should not run a budget deficit. A country should not hold debt. A society that does borrow money is acting maliciously toward its own economy. A business can benefit from the use of borrowed funds, while a country will not.

There only is one reason for which any entity ever should borrow money — to make profit off the borrowed capital. Any reason not involving a return or economic enlargement should be regarded as ignorant. Businesses borrow money because they can use the borrowed capital to turn out large profits by using money to pay for resources and assets which will make it possible for them to grow and compete in their market. The widely used principle of financial leverage is when companies borrow money and end up taking in larger profits than they would have if they had not used borrowed funds. Companies use this principle because they can retain the profit made after interest payments. Not only can a company use borrowed capital to create revenues to pay interest payments, they can create revenues above the interest owed and profit off of the loaned money — this is why companies use borrowed capital.

For a government — or any entity which cannot recover the cost of interest owed — borrowing money is foolish. When governments borrow money, they simply will lose the money paid toward the interest. A country is not a business and, therefore, has no way of recovering the cost of interest which is tied to loans.

This means counties pay much more when they should have paid much less. The U.S. government, in reality, is wasting its cit izens’ money by holding a large debt.

If the United States was to resolve its debt problem and possibly pass legislation making an unbalanced budget illegal, the country would be in much better economic standing. This would guarantee that tax dollars would be placed directly back into the nation and not into the hands of foreign creditors.

Of course, deficit spending is warranted in extreme situations. If the United States ever were to fall into a large scale depression, deficit spending would help strengthen the economy. In a depression, the economy usually needs a jumpstart. The government needs to create incentives so people will put their money into the sluggish economy and get it moving. One way a government can do this is by providing its citizens with cash, either by tax cuts or by offering jobs. This, in most cases, requires the use of borrowed funds. If laws are passed against federal debt, there would have to be a well-thought-out loop-hole clause about times of dire need.

When people run into debt problems, they must take part in the preventative act of destroying their credit cards. America needs to do exactly the same. The government needs to stop wasting money and settle its debt problem. The United States could enjoy an interest payment-free budget and a more efficient economy where American tax dollars only would benefit America, not foreign creditors.

Tim Rose is a sophomore finance major.