Focus on Budget and Debt

Focus on Budget and Debt

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On September 15, the European Central Bank issued a new working paper on fiscal consolidation. It finds that the most successful efforts spanned many years and were more heavily oriented toward spending cuts than tax increases.

A September 14 report from Pew found strong public opposition to Republican Rep. Paul Ryan’s plan to abolish Medicare and replace it with a voucher program.

On September 13, the Mercatus Center released a study by Harvard economist Jeffrey Miron that is highly critical of the impact of government spending on the economy.

A September 10 report from the Center on Budget and Policy Priorities was highly critical of a proposal by House Republican Leader John Boehner to cut domestic discretionary spending by 22 percent.

On September 9, the Federal Reserve Bank of Dallas released a study of sovereign debt default. It says that a key reason why investors avoid bonds with a perceived default risk is because it is impossible for them to claim sovereign assets in repayment, as they could in a private bankruptcy proceeding.

A September 8 article from CNNMoney detailed the many tax increases supported and signed into law by Ronald Reagan in order to reduce federal budget deficits. It notes that any Republican supporting such a policy today would be considered persona non grata in the party of Reagan.

In a September 8 speech. Secretary of State Clinton warned that excessive debt is a national security issue.  Said Clinton, “I think that our rising debt levels poses a national security threat, and it poses a national security threat in two ways. It undermines our capacity to act in our own interests and it does constrain us where constraint may be undesirable. And it also sends a message of weakness internationally. I mean, it is very troubling to me that we are losing the ability not only to chart our own destiny, but to have the leverage that comes from this enormously effective economic engine that has powered American values and interests over so many years.”

In a September 7 post, Cardozo Law School professor Edward Zelinski recommended that all Social Security benefits in excess of individual contributions be taxed as a deficit reduction measure.

The September issue of the European Central Bank Monthly Bulletin (pp. 82-84) again strongly endorsed the idea of “fiscal consolidation” as appropriate under current economic circumstances even though it would reduce growth in the short run.

The September issue of Finance & Development has an article by Boston University economist Laurence Kotlikoff on America’s hidden debt crisis.

On August 24, Federal Reserve Bank of Cleveland economist Pedro Amaral published a commentary examining the federal debt.

I last posted items on this topic on September 9.

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.