On August 23, the European Central Bank issued a working paper on the impact of government debt on economic growth in the euro area. It finds that debt begins to affect growth when it reaches 70 percent to 80 percent of GDP and becomes deleterious when debt reaches 90 percent to 100 percent of GDP.
In an August 19 paper, economists Arjun Jayadev and Michael Konczal are critical of the idea that fiscal consolidation is stimulative. The examples usually given where this appeared to be the case are inappropriate, they say, because the consolidation occurred during a boom rather than a slump.
In an August 17 commentary, economists Simon Johnson and James Kwak listed four steps to fiscal health: reduce tax expenditures, institute a carbon tax, impose a financial activities tax, and phase-out the tax exclusion for employer-provided health insurance.
Also on August 17, economist Robert Skidelsky published a commentary criticizing the idea, popular in Europe, that fiscal consolidation would be expansionary under current economic conditions.
On August 16, NBC News and the Wall Street Journal released a new poll with a number of questions related to budget issues. The suggestions for reducing the deficit with the strongest support include means-testing Medicare, increasing taxes on multinational corporations, cutting Medicare payments to physicians and hospitals, and raising both payroll and income taxes on the wealthy.
On August 12, Treasury Department economist John Kitchen and University of Wisconsin economist Menzie Chinn posted a paper on the financing of the federal debt, focusing on foreign holdings of Treasury securities.
On August 5, the Congressional Budget Office announced that its historical budget data had been extended back to 1790, including calculations of taxes and spending as a share of GDP, all available in spreadsheet form.
Bruce Bartlett is an American historian and columnist who focuses on the intersection between politics and economics. He
blogs daily
and writes a weekly column at The Fiscal Times. Read his most recent column here. Bartlett has written for Forbes Magazine and Creators Syndicate, and his work is informed by many years in government, including as a senior policy analyst in the Reagan White House. He is the author of seven books including the New York Times best-seller, Impostor: How George W. Bush Bankrupted America and Betrayed the Reagan Legacy (Doubleday, 2006).