The claim that deficits don't matter is associated most famously with Dick Cheney's remark to then-Treasury Secretary Paul O'Neill that "Reagan proved deficits don't matter" — a statement that outraged fiscal conservatives but captured a political reality that had become difficult to deny.

The economic argument for deficit tolerance is more sophisticated than it might appear. In a world where a country borrows in its own currency and its central bank can act as lender of last resort, the risk of default is structurally different from that facing a household or a company. The United States issues dollar-denominated debt and controls dollar issuance; it cannot be forced to default in the way a household can run out of money.

Modern Monetary Theory takes this logic further, arguing that the real constraint on government spending is not fiscal but inflationary — a government can spend as much as it wants as long as the spending doesn't create more demand than the economy can supply. When inflation rises, that's the signal to pull back.

The more conventional Keynesian view holds that deficits are appropriate in recessions — when the private sector is reducing spending, government should lean against the contraction — and should be reduced during expansions. The cyclically adjusted balance matters more than any single year's figure.

Fiscal hawks argue that persistent large deficits create debt burdens that constrain future governments, raise interest rates, crowd out private investment, and can, in extremis, create inflationary crises if debt becomes unsustainable.

The empirical record is genuinely mixed. Japan has run large deficits for decades without the catastrophe its critics predicted. Other countries have faced debt crises at lower debt levels. Context — who holds the debt, in what currency, at what interest rates — matters enormously.

Deficits don't matter the way a balanced budget advocate says they do. They're not nothing either.