Debates about government debt, whether in the United States,
Japan, the eurozone or elsewhere, have been missing one
fundamental point: The composition of both debt and spending
matters just as much as the size. This is such a basic, obvious
notion, yet it seems to have eluded many of the politicians,
pundits and credit raters who have been obsessing about the
billions or trillions of dollars that may be spent or saved. In
the case of the United States, it is particularly germane. For
American politicians, the big numbers are the ones that
invariably get top billing, as they did at President Barack
Obama's Monday morning press conference on the debt ceiling
fight. Yet whether it's $970 billion (the projected deficit
after the "fiscal cliff" deal) or $11 trillion (the debt held by
the public), these numbers say nothing about how money is
borrowed and spent. In Washington, the only difference between
good and bad spending is usually "spending in my district"
versus "spending somewhere else," as Obama mockingly