Your counterargument does not do much to extinguish the fiery assertions made by Holly Wood. There is a great deal of validity in those remarks that assert the proposition of government’s role as not this enterprising entity needing to balance its books, and therefore the paradoxical and incessant desire to “balance the budget” by most conservatives on this topic is baseless on many fronts. The retort that this is a matter of accounting or as you put it a “misunderstanding of accounting” does more to highlight her expletory points rather convincingly.
Government accounting (GASB) should not be confused with for-profit business accounting(GAAP) because both entities operate under distinctive environments and for discernable purposes. The U.S. government’s mission statment is its Constitution and it is all encompassing for the survival of the Union, for business it’s the bottom-line for shareholders translating to sustaining or growing market share. Business operates for the benefit of its shareholders, whereas the government operates for the benefit of society — businesses included. America’s stakeholders extends beyond its borders. There is a huge difference with this.
The tendency for businesses to make a profit or to remain an ongoing concern derives from the faith and stability of governments that provide the conditions for seeking fulfillment — operating and or contributing to doing business is among them — as opposed to unstable governments. Moreover business is dependent upon the cooperation of governments whereas government is not necessarily dependent on business. The U.S. democratic form of government and its embrace of capitalism inspires the formation and growth of business so much that it is seen as subsidizing it. And for all its effort in doing so it has, dare I say, enabled businesses to disproportionately and oftentimes recklessly wield devastatingly adverse effects on its society with proliferating inequality, and in contributing to societal ills. The confluence can become so subversive that government can be seen as perverted by this behavior and that is why regulations and antitrust laws are more than just pragmatic. Capitalism left unfettered would essentially cannibalize itself without the intervening power of state.
The aspect of accounting and the spotlight of government lending in this regard is an oversimplification of a much broader mission of government in this instance. Incidentally, the financial crisis and housing bubble was not sparked by raising the debt limit or by the U.S. deficit. Contemporarily, the U.S. debt is of no consequence with interest rates this low, and demand for safe investments in the world’s currency reserve is relatively high during this recovering, relatively stable, and moderately growing economy. The argument to stifle spending and prepay outstanding obligations is without merit and can be self-inflicting making society quite unstable — inviting hostility that would rival a police state. Besides security, the government and its various agencies with their respective mandates is prompted only to maintain and advance civil order that imbue a productive society that just so happens to be conducive to doing business.