Plausible? The Government Wants You in Debt

Do government policies make it much easier to be a spender rather than a saver?

A WiseBread post makes just that accusation:

Taxes (either increases or decreases) have been a method in which a government can modify personal behavior. If the government wants people to stop smoking, it creates a “sin” tax to make it more costly to smoke. When a government offers tax incentives for acquiring debt, they are basically stating they want you to purchase things with debt. The government then rewards you when you comply.

The examples given of the government’s debt-fostering efforts include recent initiatives such as Cash for Clunkers and the $8,000 tax credit for first-time home buyers, along with the longstanding practice of allowing mortgages to be tax-deductible—which nearly every other country does not do.

So, is there some sinister conspiracy afoot? I don’t think so. Not exactly anyway. It’s pretty obvious what the government is doing, and has been doing for decades. The goal is to get the economy cranking along in eternity, and because that is an impossibility—the natural flow has ups and downs and plateaus and false starts—the politicians and econo-wonks toss in occasional jumpstarts and kicks in the pants.

The economy hums along best when people buy and buy and buy. Whether or not they need or can afford what they’re buying is beside the point. The government and all the business interests don’t seem to care. Giving the powers that be the benefit of the doubt, perhaps it’s just an unintended consequence of these policies that many, many consumers are deep in debt.

Then again, do our leaders actually prefer it when we’re “aspirational” consumers, buying things that are beyond our means? When people are in debt, they’re driven to dig themselves out, and they’ll work and work and work to do so—and then, human nature being what it is, a good portion of them will want to reward themselves by buying some more stuff, starting the whole cycle over again. And what do you know? The presence of a workforce that’s really eager, even desperate to work is also good for the economy.

You Need to Save. But Collectively, We Need to Spend

http://www.beatingdebt.org BDO

Well, we are a debt-driven economy. So, there are many elements within the economy, including government, that understand that as they are able to convince people to take on more debt, the economy will grow. The follow on question is, if hoping that people go into more debt is the best possible long term solution to the growth of an economy?
http://money.blogs.time.com/2010/09/20/why-frugal-minded-savers-loathe-inflation/ Why Frugal-Minded Savers Loathe Inflation – It's Your Money – TIME.com

[...] to spend to get the economy humming along again. Such an ambivalent message gives some merit to the theory that the government wants you in debt, mainly because when people are in debt it's good for the economy in two key ways: 1) The fact that [...]
http://money.blogs.time.com/2010/10/06/for-the-good-of-the-economy-you-should-spend-money-you-dont-have/ For the Good of the Economy, You Should Spend Money You Don’t Have – It's Your Money – TIME.com

[...] so with cash alone, so it looks like a continuation of the culture of debt is in order—and that's exactly what the government and economists want, according to one theory. Gross writes plainly: Unless you're a [...]