Tuesday, August 9, 2011

Ebook of the Week - Do Deficits Matter?

Shaviro, Daniel.  Do Deficits Matter? Chicago: University of Chicago Press, 1997

Shaviro’s answer to this starkly posed question is that yes, the federal deficit does matter, even though it is often misunderstood by the general public and politicians alike. In this economic analysis, Shaviro discusses concepts such as “tax lag” and “generational accounting” in concluding that while deficits are not in themselves an evil, the present (and this was written fourteen years ago) degree of national deficit formation is unsustainable for much longer. Indeed, he likens American fiscal policy in the last fifty years to a Ponzi scheme that can only be remedied by making choices among tax increases, benefit reductions, debt issuance at higher interest rates, and printing money. Ultimately, Shaviro concludes that Americans will have to adjust to “realistic expectations about what government-provided benefits, at what cost in lifetime taxes” can be had “in a world where resources are finite.” The recent crisis involving the raising of the debt ceiling has brought these issues sharply into focus, but will obviously not be the end of this highly charged debate.

Preview by Jack Ray.  Click here to read the book.

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