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Where America’s Fiscal Debate Goes Off the Rails

Summary:
The debates about investment in physical and social infrastructure are precisely what the US needs to decide what kind of society it should be and the appropriate role of government. Where there should be no debate is how best to finance such investment. BERKELEY – The US Congress has just taken an important step toward implementing President Joe Biden’s fiscal plans, by passing a signature trillion infrastructure bill. Now we will see whether the Congressional Budget Office (CBO), in its non-partisan wisdom, agrees that the companion plan for .75 trillion in social and climate-related spending is fully financed by additional taxes and other “pay fors,” as moderate Democrats evidently require.

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The debates about investment in physical and social infrastructure are precisely what the US needs to decide what kind of society it should be and the appropriate role of government. Where there should be no debate is how best to finance such investment.

BERKELEY – The US Congress has just taken an important step toward implementing President Joe Biden’s fiscal plans, by passing a signature $1 trillion infrastructure bill. Now we will see whether the Congressional Budget Office (CBO), in its non-partisan wisdom, agrees that the companion plan for $1.75 trillion in social and climate-related spending is fully financed by additional taxes and other “pay fors,” as moderate Democrats evidently require.

At one level, this is precisely the debate the country needs. It is a debate, fundamentally, about what kind of society the United States should be and about the appropriate role of government. Should government, to address inequality, provide more support for childcare because it enables women to enter the labor force and fosters healthy childhood development, especially among...

Barry Eichengreen
Barry Eichengreen is Professor of Economics at the University of California, Berkeley; Pitt Professor of American History and Institutions at the University of Cambridge; and a former senior policy adviser at the International Monetary Fund.

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