Fiscal Issues



Federal Deficit Spending



Veronique de Rugy, “Federal Spending in Perspective,” Mercatus Center, George Mason Univ., mercatus.org, Oct. 2011.  Author explains none of three proposed budget plans solve the mismatch between federal revenue and federal spending.


John Merline, “The Austerity Myth: Federal Spending Up 5% This Year,” Investors Business Daily, Oct. 17, 2011.  Author demonstrates that despite financial crisis, federal and state spending continues to increase.


Alan S. Blinder, “Four Deficit Myths and a Frightening Fact,” Wall St. Journal, Jan. 19, 2012.  Author opines that deficit-reduction is a low priority for the American public, that cutting spending immediately is not necessary, that there is no general problem of “runaway spending,” and that the real long-term deficit problem is health-care expenses.


Bill Whittle, “The Vote Pump,” The Firewall (video), Jan 25, 2012,  Whittle presents succinct pie chart breaking down federal revenues, borrowing, and spending, to show that most federal spending consists of entitlements that by law cannot be reduced.


Jed Graham, “Social Security Trust Fund Takes $1 Tril Dive,” Investors Business Daily, Feb. 2, 2012.  Author examines new Congressional Budget Office report concerning on the Social Security deficit, which the CBO estimates will be $1 trillion larger in 2022 than the CBO estimated last year.


Bruce Bartlett, “Cooking the Books: the 2010 Deficit Was $2.1 Billion,” www.thefiscaltimes.com, Dec. 24, 2010.  Author reports that if the U.S. government used accrual accounting, which gives a more accurate financial picture and is mandatory for large corporations, the 2010 deficit would have been $2.1 trillion instead of the reported $1.3 trillion.



Avik Roy, “Obamacare’s Fiscal Time Bomb,” www.nationalreview.com, Jan. 12, 2011.  Author concludes that the Congressional Budget Office’s projection that Obamacare’s exchange subsidies will cost $109 billion in 2019 is low by trillions of dollars.


John Merline, “Opinion: What Does Government Do?,” www.aolnews.com, Feb. 19, 2011.  Author points out that federal budget category of “direct payments to individuals,” which accounted for 2.4% of federal spending in 1945, now accounts for more than two-thirds of federal spending.


Jeffrey H. Anderson, “Mandatory Spending to Exceed all Federal Revenues — 50 Years Ahead of Schedule,” www.weeklystandard.com, Mar. 16, 2011


James C. Cooper, “Budget Deficit: Government Handouts Top Tax Income,” The Fiscal Times, April 18, 2010.  Author reports that for the first time since the Great Depression, American households are receiving more income from government than they are paying in taxes.


Lawrence H. White, “From Pleasant Deficit Spending to Unpleasant Sovereign Debt Crises,” (Chap. 15 from The Clash of Economic Ideas), Mercatus Center, George Mason Univ., April 2011. 
http://mercatus.org/sites/default/files/publication/wp1122-from-pleasant-deficit-spending-to-unpleasant-sovereign-debt-crises.pdf


John Hinderaker, “The Purpose of Government,” www.powerlineblog.com, April 28, 2011.  Author explains that federal government’s principal function is to transfer wealth from the young and middle-aged to the elderly because such transfers account for $1.159 trillion annually.



The National Debt





Reinhart & Rogoff, “Too Much Debt Means that the Economy Can’t Grow,”  Bloomberg, July 14, 2011.  Authors explain how excessive public debt stalls economic growth and cite historical precedent.


Veronique de Rugy, “The Facts About Spending Cuts, the Debt, and GDP,” Mercatus Center, George Mason Univ., reason.com, July 29, 2011.  Author debunks economic myths that downplay the gravity of the U.S.’s fiscal situation.



Patrick Tyrell, “US Debt Now Surpasses 2010 GDP,” Heritage Foundation, The Foundry, Aug. 5, 2011.  Author reports that U.S. public debt is larger than the country’s 2010 GDP.



John Steele Gordon, “A Short Primer on the National Debt,” The Wall Street Journal, wsj.com, Aug. 29, 2011.  Author lays out basic facts of U.S. public debt and argues that there are no insuperable problems to getting that debt under control.



Laurie Newsom, “Standard & Poors Downgrade Simplified,” gainesvilleteaparty.org, Sept. 4, 2011.  Author removes a numver of zeroes from federal revenue, spending, and debt figures and presents them as if the government were a household to show how broke the U.S. is.



John Hinderaker, “U.S. Deleveraging, Unlike Some,” Powerline blog, Jan. 22, 2012.  Author points out that total individual, business, and government debt in the U.S. has declined 16% since 2008 despite skyrocketing increases in government debt because individuals in the U.S., unlike those in other developed countries are deleveraging, and concludes that the U.S. could return to economic growth quickly if it could get federal spending under control.  Another article that we could not reproduce pointed out that two-thirds of individual deleveraging is attributable to defaults on mortgages and credit cards.



Fiscal Crisis and Historical Collapse -  Niall Ferguson, Harvard University
Lecture Slides
Historical perspective on national debt crises and conclusion that the US is following the same path to insolvency as the weaker European Union economies.



Niall Ferguson, “Fiscal Crises and Imperial Collapses: Historical Perspectives on Current Predicaments,” Niarchos Lecture, Peterson Institute for International Economics, Washington, D.C., May 13, 2010.  Speaker provides historical perspective on national debt crises and concludes that the U.S. is following the same path to insolvency as the weaker European Union economies


Veronique de Rugy, “The Cost of the Debt Explosion,” www.nationalreview.com, Nov. 22, 2010.  Author’s chart shows that interest on debt obligations will eventually consume most of the federal budget.



John Tanny, “The Politics and Economics of a U.S. Debt Default,” www.realclearmarkets.com, Dec. 2, 2010.  Author compares outright sovereign default to stealth default through inflation.



e21 editorial staff, “The Next Entitlement Program: Interest on Debt,” www.economics21.org, March 3, 2011.  Authors project U.S. government’s interest burden over time and conclude that President Obama’s 2010 budget “suggests a willingness to take risks with debt accumulation that the nation simply cannot afford”


Dennis Cauchon, “U.S. funding for future promises lags by trillions,” USA Today, June 6, 2011.  Author reports that federal government’s unfunded liabilities are $61 trillion.

Jeff Cox, “US Is in Even Worse Shape Financially Than Greece: Gross,” CNBC.com, June 13, 2011.  Bill Gross, head of world’s largest bond fund, says that federal unfunded liabilities are nearly $100 trillion.



Federal Taxation







Kevin D. Williamson, “Let’s Give Wall Street a 70% Pay Raise,” Exchequer, NRO.com, Oct. 13, 2011.  Author debunks Democratic Party talking point, first urged by Warren Buffet, that billionaires’ secretaries pay higher income-tax rates than the billionaires.

John Berlau and Trey Kovacs, “Romney and the Burden of Double Taxation,” Wall St. Journal, Jan. 24, 2012.  Authors point out that Romney’s tax rate is much higher than the 15% rate on capital gains and qualified dividends because the corporations in which Romney owns shares already have paid up to 35% in corporate income tax.




Stephen Moore & Richard Vedder, “Higher Taxes Won’t Reduce the Deficit,” Wall St. J., Nov. 21, 2010.  Authors argue, based on U.S. fiscal history since 1947, that raising taxes to reduce the federal deficit is “a fool’s errand” because politicians will spend any additional revenue and more.


Veronique de Rugy,”Reality Isn’t Negotiable: the Government Can’t Raise More than 19% in Taxes for Long,” Mercatus Center, George Mason Univ., www.mercatus.org, Nov. 29, 2010. http://mercatus.org/publication/reality-isnt-negotiable-government-cant-raise-more-19-taxes-long

W. Kurt Hauser, “There’s No Escaping Hauser’s Law,” Wall St. J., Nov. 26, 2010.  Author points out that tax revenues as a share of U.S. gross domestic product have averaged just under 19% regardless of tax rates, and concludes that it would be better to cut tax rates and get 19% of a larger pie.



Editorial, “The Audacity of Economic Ignorance,” www.investorsbusinessdaily.com, Dec. 3, 2010.  Editors criticize Ohio Senator Sherrod Brown’s staggering ignorance on the subjects of  taxation and the role of consumer spending in economic growth.



Ryan Ellis, “Comprehensive List of Tax Hikes in Obamacare,” Americans for Tax Reform, Jan. 14, 2011.  The author lists 21 new taxes in Obamacare that add up to billions of dollars.



Nicoletta Batini, Giovanni Calegari, and Julia Guerreiro, “An Analysis of U.S. Fiscal and Generational Imbalances: Who Will Pay and How?”
Int’l Monetary Fund Working Paper, April 2011.  Authors examine U.S. public debt and demographics and conclude in a static analysis that full elimination of the fiscal and generational imbalances would require large increases in all taxes coupled with an immediate 35% cut in transfer payments to individuals.
Int’l Monetary Fund Working Paper, April 2011.  http://www.imf.org/external/pubs/ft/wp/2011/wp1172.pdf


Mark J. Perry, “Tax Rates and Shares of Revenue from Top 1%,” Carpe Diem, April 21, 2011.  Professor Perry compares the relationship over time between the top marginal income tax rate and  the share of total income taxes paid by the top 1%, and concludes that a tax cut likely would increase tax revenues from the wealthy for an overall increase in tax revenue.


M. Perry, Chart comparing Top Marginal Income Tax Rate vs. Share of Income Paid by Top 1% from 1979 to 2007, Carpe Diem, April 21, 2011. 



Steven Landsburg, “Getting It Right at Steven Landsburg,” thebigquestions.com, September 14, 2010 & September 15, 2010.  Author in original post and in a followup post, explains why even a 1% capital-gains tax is higher than an income tax.


WebCPA editorial, “Over Half of Households Paid No Income Taxes,” www.accountingtoday.com, June 3, 2011.  Editorial reports that Congressional Joint Commission on Taxation found that 51% of U.S. households paid no federal income tax in 2009.


John D. McKinnon, “High-Earning Households Pay Growing Share of Taxes,” WSJ.com, May 3, 2011.  Author traces 25-year trend of upper-income taxpayers paying an increasing share of overall federal income taxes collected.


Stephen Moore, “A 62% Top Tax Rate?,” WSJ.com, May 26, 2011.  Author explains how Senate Democrats’ proposals could result in a top combined federal and state tax rate of 62%.


Alan Reynolds, “Why 70% Tax Rates Won’t Work,” WSJ.com, June 16, 2011.  Author refutes proposal from Democratic intellectual to increase the top federal income-tax rate to 70%.




Proposed Federal Solution



Nick Gillespie & Veronique de Rugy, “How to Balance the Budget Without Raising Taxes: the 19 Percent Solution,” Reason, March 2011



Iain Murray and F. Vincent Vernuccio, “The Enemy Within,” www.nationalreview.com, Dec. 14, 2010.  Authors examine public-sector unions’ role in driving government spending, and propose use of British Prime Minister Thatcher’s 1980s tactics of removing public-sector unions’ privileges and then undermining their power base by privatizing services.




New Jersey Pension Crisis





Jarrett Renshaw, “Christie’s overhaul may not save N.J. pension system,” nj.com, Oct. 23, 2011.  Author explains why the governor’s overhaul of public-employee pensions will not prevent pension obligations from outstripping state’s capacity to pay them.


Getting an Accurate Picture of State Pension Liabilities” - Explains that states are underestimating their unfunded pension liabilities by projecting unrealistically high rates of return on pension-fund assets.


Eileen Norcross and Andrew Biggs, “The Crisis in Public Sector Pension Plans: a Blueprint for Reform in New Jersey,” Mercatus Center, George Mason Univ., June 2010.  http://mercatus.org/sites/default/files/publication/WP1031-%20NJ%20Pensions.pdf


The Crisis in Public Sector Pension Plans: a Blueprint for Reform in New Jersey”: - Examines the causes and scope of New Jersey’s public-pension crisis and proposes several measures to solve it.

U.S. Sec. & Exchange Comm., “SEC Charges State of New Jersey for Fraudulent Municipal Bond Offerings,” press release, Aug. 18, 2010.  Government files formal charge that between August 2001 and April 2007, New Jersey engaged in securities fraud in the sale of $26 billion of municipal bonds by creating an impression that two of its public-pension funds were being adequately funded.



T. Dopp, Bloomberg, “New Jersey’s Pending-Funding Deficit Climbs More than 17% to $53.9 Billion,” Dec. 23, 2010.  Author reports that New Jersey’s public-pension funding deficit increased by more than 17% in 2010.



State Pension Crisis





Harris Kenny, “Harrisburg, PA Declares Bankruptcy – Who’s Next?” Reason.org, Oct. 12, 2011.  Author reports consequences of Harrisburg’s bankruptcy and identifies nine other cities, including three in New Jersey that may go bankrupt.


Reuters,“US States Are Facing Total Debt of Over $4 Trillion,” CNBC.com, Oct. 24, 2011.  Reuters describes new debt analysis by State Budget Solutions.



William Voegeli, “The Big-Spending, High-Taxing, Lousy-Services Paradigm,” City Journal, Autumn 2009.  Author compares the tax and public-services environments of California and Texas, and concludes that Texans pay less taxes than Californians but receive better public services.


Eileen Norcross, “Getting an Accurate Picture of State Pension Liabilities,” Mercatus on Policy No. 85, Mercatus Center, George Mason Univ., Dec. 2010.  Author explains that states are underestimating their unfunded pension liabilities by projecting unrealistically high rates of return from pension fund assets. 
http://mercatus.org/sites/default/files/publication/Getting%20an%20Accurate%20Picture%20of%20State%20Pension%20Liablilities.Norcross.12.13.10_0.pdf


Mark Flatten, “National Conference of State Legislators gathers over ‘dire’ numbers,” www.watchdog.org, Dec. 9, 2010.  Author reports on various states’ approaches to dealing with budget shortfalls.


Veronique de Rugy, “The Municipal Debt Bubble,” www.reason.org, Dec. 14, 2010.  Author predicts that state and municipal governments could find themselves in a bond-default crisis and seek a near-trillion dollar bailout from the federal government.


Michael Cooper & Mary Williams Walsh, “Mounting Debts by States Stoke Fears of Crisis,” N.Y. Times, Dec. 4, 2010.  Authors review states’ long-term finances and conclude that debt will overwhelm many of them even if the economy recovers.


Steven Malanga, “States Slow to Face Fiscal Reality,” www.realclearmarkets.com, Dec. 15, 2010.  Author reports that most states are using stimulus money and one-time revenue raisers instead of attempting basic long-term budget reforms.



Michael A. Fletcher, “States face $1.26 trillion shortfall in funds to pay retiree benefits,” www.washingtonpost.com, April 26, 2011.  Author quotes a Pew Center study finding that in fiscal 2009, the states’ pension and health-care funding gap increased by 26% over the previous year.


Greg Hinz, “Cook Taxpayers owe $108 billion, count Treasurer Pappas says,” ChicagoBusiness.com, June 21, 2011.  Cook County Treasurer says that county’s debt now totals $108 billion, including $25 billion in unfunded public-employee pensions.  (followup report indicates that the $108 billion figure is too low because 55 units of county government did not report their pension liabilities and the figure does not include unfunded health-care obligations to retired public employees)




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