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Do Deficits Matter? cover
  • ISBN: 9780226751122
  • ISBN10: 0226751120

Do Deficits Matter?

by Daniel Shaviro

  • List Price: $32.00
  • Binding: Hardcover
  • Publisher: Univ of Chicago Pr
  • Publish date: 05/01/1997
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Description
Do deficits matter? Yes and no, says Daniel Shaviro in this landmark study. Politicians and the media blame the deficit for economic ills ranging from high interest rates to low economic growth, but little attention is paid to why it should have these effects, if in fact it does. For the first time in two centuries of deficit debate, Shaviro unites the various strands of economic, legal, and political analysis of deficits in an effort to lay the foundation for rational public discussion.

Shaviro shows that the deficit statistics usually bandied about have little economic content. They ignore who is paying taxes or receiving benefits. And, since they look only at current cash flow, deficit statistics ignore long-term trends such as pending Social Security and Medicare insolvency.

Nevertheless, Shaviro believes that deficits matter because they have generational and macroeconomic consequences. He argues, however, that it is hard to tell whether these consequences are good or bad, since this depends on future economic conditions that are impossible to predict. Moreover, even if deficits contribute to excessive government spending, a balanced budget amendment is likely to prove ineffective or even counterproductive. He concludes that Social Security and Medicare reform will be necessary within the next few years.

Sophisticated in its analysis yet accessible to the general reader, Do Deficits Matter? will be an invaluable guide for anyone wanting to know exactly what is at stake in the ongoing debate in America.

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