The time it takes to turn the fiscal ship is very long. This means its necessary to start to work to balance the budget even though the recovery from the 2007-2009 recession is in its early stages. If we wait the deficit will continue to balloon even as that is inappropriate for where the economy is at and the overall debt burden goes beyond what the the bond market will sustain.
One way to understand this is to focus on how the stimulus spending from 2009 has been too slow to really contribute to recovery. John Taylor has some interesting testimony on that:
The Empty Chairs at the ARRA Hearing
JohnBTaylor@Stanford.Edu (John B. Taylor)
Wed, 16 Feb 2011 20:19:00 GMT
My testimony focused on the eight quarters of data since the start of the stimulus which have now been made available by the Department of Commerce, updating a recent study by John Cogan and me. The most striking finding of that data is that only .04 percent of GDP in the large $862 billion package went to federal infrastructure spending, and the large amounts of funds sent to the states for infrastructure spending have not resulted in an increase in infrastructure spending. Raul Labrador of Idaho asked me if the stimulus package would have worked better if there had been more infrastructure spending, but the lesson is that it’s not really feasible to start large government infrastructure projects in a timely enough manner to affect the economy in a recession. There is no such thing as “shovel ready.” In my view we learned that from the 1970s stimulus packages, and indeed it is part of the reason that many of us teach in elementary economics that such discretionary stimulus packages are ineffective.