Borrow today and forget about tomorrow

That old clown Anatole Kaletsky is at it again. His article in today's Times was truly shocking. As we draw closer to Darling's hellish budget statement, he advised us that we shouldn't worry about excessive government borrowing.

The idea that public finances could improve of their own accord alongside an economic recovery, without any need for the Chancellor to announce tax increases or spending cuts in next week's Budget, may sound like irresponsible wishful thinking. Can I really be recommending that the Treasury should just carry on borrowing and hope for the best? The answer is yes. Hoping for the best is a more responsible and realistic policy than committing many years in advance to large tax rises or public spending reductions.

This sort of advice reminds me of a chronically obese person going to a doctor and being told: "Keep on eating. Who knows? you might suddenly become thin".

No government can borrow 10-12 percent of GDP without at the same time expecting severe long-term consequences. Like households, governments have budget constraints.

All the debt, including public sector debt, must be repaid, either through higher taxes or higher inflation. Governments who borrow excessively should also expect to pay higher interest rates, which displaces social sector expenditures.

The idea that the government should just keep on borrowing and forget about the consequences is just foolish.