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Thursday, November 29, 2012

Caught in a Budget Trap #tcot

by Jagadeesh Gokhale

This article appeared in The Hill on November 29, 2012.

The recent drumbeat from the political left on the disastrous effects of "austere" budget-cutting in European economies is intended to sandbag against similar policies in the United States. The key contention is that spending cuts have made budget balancing more difficult in European countries: supposedly, lower public spending in those countries reduced employment and income, reduced government revenues and increased the ratio of government debt to Gross Domestic Product. The left concludes that, to avoid a similar experience, the U.S. should increase spending in the short term, instead of cutting it, and attempt a "grand bargain" to balance long-term spending and taxes.

The problem is there may never be a "right" time to transition to the promised long-term structural budget resolution.

Read the article at The Cato Institute…


Gokhale, Jagadeesh (2012, November 29). Caught in a Budget Trap. Retrieved November 29, 2012, from The Cato Institute Web site: http://www.cato.org/publications/commentary/caught-budget-trap

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