Focus on Public Finance

Focus on Public Finance

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On August 31 the Census Bureau issued a report on the distribution of federal domestic spending. It equaled more than $10,000 for every person in the United States in fiscal year 2009.

In an August 30 commentary, Roosevelt Institute economist Marshall Auerback reviews the lessons of 1937, when fiscal and monetary tightening brought on a sharp recession that prolonged the Great Depression by several years.

In an August 27 post, economist Felix Salmon suggested that the Treasury issue perpetual bonds that are indexed to inflation.

Also on August 27, the Committee for a Responsible Federal Budget updated its baseline budget projections and concluded that deficits are likely to be much larger than currently projected by the Congressional Budget Office.

And on August 27, European Central Bank president Jean-Claude Trichet addressed the Federal Reserve Bank of Kansas City’s Jackson Hole conference. His main point was that the recent crisis was largely caused by excessive debt and that debt must be reduced to get the world’s economies growing sustainably.

In an August 27 paper, Indiana University economist Eric Leeper argued that while over time monetary theory has become more scientific, fiscal theory is still relatively unsophisticated. He urged further research on questions about the economic impact of fiscal policy.

In an August 25 commentary, University of Chicago economist Casey Mulligan examined the budgetary cost of the Iraq war. He argues that the cost already incurred is much higher than the $700 billion estimated by the Congressional Budget Office because of veterans’ costs that will have to be paid.

Also on August 26, Morgan Stanley economist Arnaud Marès posted an analysis of sovereign debt default. He suggested than one likely alternative to outright default will be “financial oppression” in which governments impose losses on creditors without legally defaulting. On August 29, University of Chicago economist Gary Becker commented on this report. He suggested that Marès had underestimated the potential for faster growth to reduce the burden of debt.

On August 24, economist Arnold Kling posted a working paper examining the conditions under which a debt crisis would be triggered in the U.S.

Also on August 24, Reuters and Ipsos released a poll showing that 54 percent of Americans believe that reducing the deficit is more important than cutting taxes; 43 percent favored cutting taxes over deficit reduction.

I last posted items on this topic on August 24.

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).

Bruce Bartlett’s columns focus on the intersection of politics and economics. The author of seven books, he worked in government for many years and was senior policy analyst in the Reagan White House.