unsustainable fiscal policy Archive

Another Path To Solvency

By John Lumbard. The legislatures of seventeen states have recently passed a bill calling for a constitutional convention that would be focused solely on the drafting of a balanced budget amendment to the Constitution.  Each of these bills explicitly states that it will be declared null and void if the Supreme...
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Contagion and Eurosclerosis

By John Lumbard. The debt of Portugal has fallen in value so much that a buyer can now get a yield of 16% on long term, ten year bonds.  Portugal won't have to actually pay 16% until it has to borrow again (most likely when an old bond issue matures and...
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So. There Really Was Enough Money After All . . .

By James Schaefer.   The existence of the Alternate Plan, which substitutes for Social Security in three Texas counties, is proof that Social Security has collected sufficient FICA revenue over the decades to keep the system solvent (Perry Is Right; There Is a Texas Model for Fixing Social Security, Wall Street Journal, September...
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The Most Predictable Economic Crisis In History

That's what Erskine Bowles, co-chair of the president's National Commission on Fiscal Responsibility, said about our government's ever-so-slowly-developing fiscal calamity in this Senate Budget Committee testimony. The President disavowed the findings of his commission, but it continued on in a scaled-down group of six members (all Senators) called the Gang of...
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Dominique Strauss-Kahn

By John Lumbard.   What does the allegedly-amoral head of the International Monetary fund have to do with budget deficits in the U.S.?  Ever since the fall of 2008 Americans have been losing trust in their leadership and institutions.  The arrest of "DSK" pulls one more pillar out from under the...
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The Milton Friedman Moment

By James Schaefer "There's no such thing as a free lunch."   Fifty years ago most Americans believed those words, and they were used by Milton Friedman in a 1975 book of that title. Jenny Fisher-Sullivan elaborated in the Wall Street Journal (March 3, 2011): The Fed works for our bankrupt federal government and...
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Party On!

By John Lumbard.   When we launched this blog the federal debt was 12-and-something trillion, and we were fretting about the first trillion-dollar budget deficit.  Really, I shouldn't have been surprised to see the $14 trillion number at the top of our home page, but it touched a nerve anyway.  And...
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The ENTIRE Government Runs on Borrowed Money

By Ron Olive.   (To the Editor of the Wall Street Journal)   Sir:   In “Revenues Are Rising” (Review & Outlook, January 12th), you tell us that, according to the Congressional Budget Office, federal receipts “have climbed by $44 billion, or nearly 9%, to $531 billion” during the first quarter of fiscal...
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Explaining the Tea Party

It's obvious that the Tea Partiers are driven by anger at the "irresponsibility of Congress" as my Colby College English professor Ed Witham put it (many times) in the mid-to-late 1970s.  At first it appeared that this was all about fiscal responsibility, but let's be honest---budgets don't generate much passion. ...
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Postponing the Pain

Economist Charles Wheelan writes occasionally for Yahoo Finance, and he's always terrific.  In a recent article he suggests that the President extend the current graduated tax structure, with a plan to balance the budget in 3 or 4 years (when the economy is stronger) by cutting spending and adding consumption taxes...
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