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The Economists' VoiceTop Economists Take On Today's Problems$
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The Economists' Voice: Top Economists Take On Today's Problems

Joseph Stiglitz, Aaron Edlin, and J. Bradford DeLong

Print publication date: 2011

Print ISBN-13: 9780231143653

Published to Columbia Scholarship Online: November 2015

DOI: 10.7312/columbia/9780231143653.001.0001

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Sense and Nonsense About Federal Deficits and Debt

Sense and Nonsense About Federal Deficits and Debt

Chapter:
(p.87) Chapter 11 Sense and Nonsense About Federal Deficits and Debt
Source:
The Economists' Voice
Author(s):

Michael J. Boskin

Publisher:
Columbia University Press
DOI:10.7312/columbia/9780231143653.003.0011

This chapter discusses how much federal government deficits matter in the short, medium, and long terms. Large federal government deficits can be appropriate in some circumstances—such as in a recession, or indeed in the case of a temporary spending need such as fighting a war—and have adverse effects on the economy in other cases. When the economy is strong, the budget should be in a surplus. Although it is impossible to be precise about the exact length of the short term—a period over which a deficit does not matter if it is cushioning the economy against the worst effects of a business cycle downturn—it is clear that large deficits year after year are a matter for concern. They imply an ever-growing tax burden on future generations of taxpayers. The chapter argues that we should not just look at the absolute size of the deficit itself. It provides a framework to ascertain more clearly whether we should or should not be worried about the size of the deficit.

Keywords:   fiscal policy, budget deficits, federal government, fiscal deficit, recession, temporary spending

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