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New CBO Numbers and the Simple Formula for Good Fiscal Policy, Part II

Based on new 10-year fiscal estimates from the Congressional Budget Office, I wrote yesterday that balancing the budget actually is very simple with a modest bit of spending restraint. If lawmakers simply limit annual spending increases to 1 percent annually, the budget is balanced by 2022. If spending is allowed to grow by 2 percent […]

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New CBO Numbers and the Simple Formula for Good Fiscal Policy, Part I

The Congressional Budget Office, as part of The Budget and Economic Outlook: 2017 to 2027, has just released fiscal projections for the next 10 years. This happens twice every year. As part of this biannual exercise, I regularly (most recently here and here) dig through the data and highlight the most relevant numbers. Let’s repeat […]

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All I Want for Christmas Is…a Spending Cap

What could be more fun than to spend the day before Christmas reading about fiscal policy? I realize there are probably endless ways to answer that question, particularly since normal people are probably more concerned about the rumor that the feds are going to arrest Santa Claus. But America’s fiscal future is very grim, so […]

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New CBO Numbers Confirm Simple Task of Balancing the Budget with Modest Spending Restraint

It’s not a big day for normal people, but today is exciting for fiscal policy wonks because the Congressional Budget Office has released its new 10-year forecast of how much revenue Uncle Sam will collect based on current law and how much the burden of government spending will expand if policy is left on auto-pilot. […]

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Japan’s Slow-Motion Fiscal and Monetary Suicide

Remember Bill Murray’s Groundhog Day, the 1993 comedy classic about a weatherman who experiences the same day over and over again? Well, the same thing is happening in Japan. But instead of a person waking up and reliving the same day, we get politicians pursuing the same failed Keynesian stimulus policies over and over again. […]

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The Six Most Important Takeaways from CBO’s New Long-Run Fiscal Forecast

The Congressional Budget Office has just released the 2016 version of its Long-Term Budget Outlook. It’s filled with all sorts of interesting data if you’re a budget wonk (and a bit of sloppy analysis if you’re an economist). If you’re a normal person and don’t want to wade through 118 pages, you’ll be happy to […]

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A Semi-Acceptable Indirect Bailout for Puerto Rico?

I wrote last year about why Puerto Rico got into fiscal trouble. Like Greece and so many other governments, it did the opposite of Mitchell’s Golden Rule. Instead of a multi-year period of spending restraint, it allowed the budget to expand faster than the private sector for almost two decades. As the old saying goes, […]

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Debt, Bubbles, and Reckless Government

As a general rule, I’m not overly concerned about debt, even when looking at government red ink. I don’t like deficit and debt, to be sure, but government borrowing should be seen as the symptom. The real problem is excessive government spending. This is one of the reasons I’m not a fan of a balanced […]

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Higher Taxes Are a Recipe for Higher Spending, not Lower Debt

With both Hillary Clinton and Bernie Sanders agitating for higher taxes (and with more than a few Republicans also favoring more revenue because they don’t want to do any heavy lifting to restrain a growing burden of government), it’s time to examine the real-world evidence on what happens when politicians actually do get their hands […]

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Budget Myths and Facts for the 2016 Campaign

I have a very mixed view of the Committee for a Responsible Federal Budget, which is an organization representing self-styled deficit hawks in Washington. They do careful work and I always feel confident about citing their numbers. Yet I frequently get frustrated because they seem to think that tax increases have to be part of […]

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Greek Politicians Should Learn from Latvia

I wrote last month that the debt burden in Greece doesn’t preclude economic recovery. After all, both the United States and (especially) the United Kingdom had enormous debt burdens after World War II, yet those record levels of red ink didn’t prevent growth. Climbing out of the debt hole didn’t require anything miraculous. Neither the […]

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Greece’s Debt Is Sustainable

The conventional wisdom, pushed by the IMF and others, is that Greece’s economy will never recover unless there is substantial debt relief. Translated into English, that means the Greek government should be allowed to break the contracts it made with the people and institutions that lent money to Greece. That may mean a “haircut,” which […]

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State Fiscal Rankings and Implications for Public Policy and the 2016 Presidential Race

There’s an old saying that states are the laboratories of democracy. But since I’m a policy wonk, I focus more on the lessons we can learn from the states about public policy. Such as the importance of limiting the destructive nature of taxes. Such as the economic benefits of not having an income tax. Such […]

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The Congressional Budget Office’s Semi-Decent Dynamic Scoring of Obamacare Repeal

I’m a long-time advocate of “dynamic scoring,” which means I want the Congressional Budget Office and Joint Committee on Taxation to inform policy makers about how fiscal policy changes can impact overall economic performance and therefore generate “feedback” effects. I also think the traditional approach, known as “static scoring,” creates a bias for bigger government […]

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The Economist and New York Times Channel Fox Butterfield on Keynesian Policy

Back in 2010, I described the “Butterfield Effect,” which is a term used to mock clueless journalists for being blind to the real story. A former reporter for the New York Times, Fox Butterfield, became a bit of a laughingstock in the 1990s for publishing a series of articles addressing the supposed quandary of how crime […]

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Why the !*%# Is the Rest of the World Subsidizing Suicidal Fiscal Policy in Greece?!?

I detest writing about Greece. I suggested back in 2010 that the best outcome was default, which would have been the most likely outcome of a no-bailouts approach. And for the past five years, events have confirmed – over and over again – that this was the right approach. So you can understand how frustrating […]

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America’s Greek Fiscal Future

Last September, I wrote about some very disturbing 10-year projections that showed a rising burden of government spending. Those numbers were rather depressing, but a recently released long-term forecast from the Congressional Budget Office make the 10-year numbers look benign by comparison. The new report is overly focused on the symptom of deficits and debt […]

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Balanced Budget Requirements Don’t Work as Well as Spending Limits

When I first came to Washington back in the 1980s, there was near-universal support and enthusiasm for a balanced budget amendment among advocates of limited government. The support is still there, I’m guessing, but the enthusiasm is not nearly as intense. There are three reasons for this drop. Political reality – There is zero chance […]

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More Anti-Factual Analysis from Paul Krugman

I don’t know whether to be impressed or horrified by Paul Krugman. I’m impressed that he’s always “on message.” No matter what’s happening in America or around the world, he always has some sort of story about why events show the need for bigger government. But I’m horrified that he’s so sloppy with numbers. My […]

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Bill Clinton and the Retroactive Application of Mitchell’s Golden Rule

It’s amazingly simple to reduce the burden of government spending. Policy makers simply need to impose some modest spending restraint so that government doesn’t grow faster than the economy’s productive sector. In a display of humility that can only be found in Washington, DC, I call this Mitchell’s Golden Rule. And, amazingly, even the International […]

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