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America's Related Fiscal Problems
In a point-counterpoint with Henry Aaron, senior fellow at the Brookings Institution, Eugene Steuerle discusses five pressing fiscal problems facing America, and suggests tax and budget reform options to address these issues. This discourse includes agreement and disagreement, yet is honestly presented without the noise and confusion that often surround these issues. Steuerle’s and Aaron’s essays originally appear in the Journal of Policy Analysis and Management. Steuerle, C.E. (2010) “America’s Related Fiscal Problems.” Journal of Policy Analysis and Management, 29(4), 876-883.
The text below is an excerpt from the complete document. Read the full article in PDF format.
Does America have a major fiscal problem? I don’t think anyone would say that the answer is “No.” The complication is that the United States, like many OECD countries, has five “fiscal” problems, all intertwined:
These knotted fiscal issues have hit our economy simultaneously and interact multiplicatively. Short-term countercyclical policy, which generally requires rises in the debt-to-GDP ratio to counter recession, can’t work unless that ratio is reduced during good economic times. But, for the first time in U.S. history, large long-term deficits are being predetermined even if future Congresses do nothing, thus constraining short-term policy options. Meanwhile, our down-the-road deficits derive largely from putting into the law unbalanced commitments for low revenues and rising benefits, thus robbing future voters of their say over how to meet new budgetary demands or emergencies. Sclerosis occurs because these commitments increasingly direct revenues toward consumption, less work, and less saving. Finally, our policies toward the elderly increasingly favor those with fewer needs and are programmed to discriminate forever against single heads of household, among other regrettable design features.
(End of excerpt. The full article is available in PDF format.)
For the rest of the debate, see: