Focus on Budget and Debt

Focus on Budget and Debt

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In a June 26 commentary, economist Mark Zandi argued that the political impasse over the debt limit is holding back business confidence and job creation.

A June 23 Rasmussen poll found a growing recognition by voters that a majority of federal spending goes to just three programs: Social Security, Medicare, and national defense.

A June 23 Bloomberg poll found that people are evenly split on whether Republicans should hold out for large budget cuts in return for raising the debt limit. They are also evenly split on whether Republicans or the Obama administration would be responsible if markets crash because of a failure to raise the debt limit.

In a June 23 commentary, MIT economist Simon Johnson warned that deficit reduction will slow economic growth. Although some economists have argued that it could be expansionary, Johnson finds that none of the necessary conditions for this to be the case apply to the U.S. today.

In a June 23 commentary, UBS Bank economists Maury Harris and Drew Matus warned of dire consequences should the U.S. default on its debt owing to failure to raise the debt limit.

On June 22, the Congressional Budget Office released its latest long-term budget forecast. It finds that just letting all budget cuts and tax increases in current law take effect as scheduled would be sufficient to stabilize the debt-to-GDP ratio indefinitely.

Also on June 22, the Economic Policy Institute published a paper on why an inflexible cap on government spending is a bad idea.

On June 6, the Congressional Research Service published a report on whether a contractionary fiscal policy can be economically expansionary, as many Republicans argue. It finds serious problems with the academic research used to justify this claim.

I last posted items on this topic on June 22.

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. 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, Imposter: 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.