The Fiscal Game in Washington Is at Odds with Reality

US annual federal deficits 1901 to 2006

US annual federal deficits 1901 to 2006
(Photo credit: Wikipedia)

By Henry J. Aaron – Let’s play a game.

You are a legislator in a fictional country. You pride yourself on being fiscally responsible. Under current law, the government will run a small budget deficit …

Now, as a legislator, you are asked to cut taxes and raise spending–a lot! If you comply, huge and growing budget deficits will result. Debt will grow faster than income. Eventually, the debt will become so large that lenders will lose faith that the nation will have the will or ability to service the debt. When that happens, interest rates will spike and investment will collapse. What position do you take on these proposed tax cuts and spending increases?

Easy question, you say. You vote “no.” To do otherwise would be irresponsible.

If that is your position, you have just shown that you would not get very far in current U.S. politics. more>

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