Is the title of a new working paper by Peter Boettke and Chris Coyne of George Mason University. The abstract of the paper reads: Writing over 230 years ago, Adam Smith noted the ‘juggling trick’ whereby governments hide the extent of their public debt through ‘pretend payments.’ As the fiscal crises around the world…
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According to Michael Munger, the recent proposals by the deficit commission are DAFT. DAFT is short for “deficits are future taxes” and is a useful analogy to counter the political myths about debt and taxation. “With a total debt of more than $13 trillion, our government is in the midst of forcing the largest…
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The Washington Post reports that the National Commission on Fiscal Responsibility and Reform has come up with a plan to address the nation’s fiscal house of cards. The major points of the plan include: Deficit reductions by nearly $4 trillion over the next decade Large reductions in discretionary spending Tax code reform He hits…
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As the government of Ireland undergoes scrutiny and criticism for its poorly mismanaged fiscal house, the media risks missing the primary lesson. Poor public sector incentives drive politicians to enact policies that defy the laws of economics. There is no such thing as a free lunch—not even a Keynesian lunch of government issued corn…
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The New York Times has a wonderful tool for understanding how the recommendations of the presidential deficit commission could work to close the estimated annual budget shortfalls in the future. You simply go through and select spending cuts and tax increases until the budget shortfall is corrected for both in the present and future….
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HT: Chris Coyne
The Economist provides an interesting video of Robert Rubin, among a panel of finance and economics experts, participating in a simulation of what a US State financial default might look like. HT: Jeff Hummel
Despite the threat of another mass labor protest scheduled in France tomorrow, President Sarkozy is promising the modest increase in the standard retirement age from 60 to 62 will pass the legislature. Many of the French protesters are the students and youth—angry because they feel they are entitled to these “social protections”. Young people in the…
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Ken Rogoff on rising gold prices and public debt: “At $1,300, today’s price is probably more than double very long-term, inflation-adjusted, average gold prices. So what could justify another huge increase in gold prices from here? “One answer, of course, is a complete collapse of the U.S. dollar. With soaring deficits, and a rudderless…
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The New York Times on Monday, columnist Peter Orszag addresses the important issue of the the unsustainable budget deficit problem and the current high unemployment. What Orszag suggests as a “compromise” neglects the heart of both problems. Orszag suggests that “ideally only the middle-class tax cuts would be continued for now” but that doing…
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