A Model for Repairing National Debt. The more than 500 point drop in the stock market on Thursday shows that neither the public nor investors think lawmakers in Washington have developed a process or the details necessary to solve the national debt crisis. This is despite agreement to raise the debt ceiling by $2.4 trillion on Tuesday. Unless Congress, now at a record low 14% public approval rating, finds a better way to deal with partisan conflict than it has in the past year, the country risks lapsing back into the kind of recession, or worse, that we had in 2008, the last time the stock market dropped that much: 5% in the last week, 11% in two weeks.
But the problem is fixable, mostly by learning from the mistakes of the past year: 1. Pick A Dispassionate Panel. Unless the panel can do its work well between now and Nov. 23, when its proposals are due, the country will be right back into a heated and likely dysfunctional debate on spending cuts. 2. 3. 4. 5. 6. 7. 8. 9. 10. Basic Overview of Budget Deficit Debates. Balanced budget debate The budget deficit is often in the media spotlight. The budget deficit is defined as the difference between what the government spends and what the government collects. Government spending takes the form of salaries, defense spending, aid programs, and other cash outflows. Government collection predominately take the form of taxes. When the government spends more than it collects, a budget deficit exists. When the government collects more than it spends, a budget surplus exists. There are three basic sides to the balanced budget debate.
Traditionalists argue that a reduction in the budget deficit will significantly help the economy in the long run. But the Ricardian view of the budget deficit takes a much less negative position on this issue. The third position, a bit on the fringe, claims that the budget deficit is not a reasonable measure of fiscal policy. Which of these views is most reasonable? Burden of the national debt. Why Government Spending Does Not Stimulate Economic Growth: Answering the Critics. John Maynard Keynes. John Maynard Keynes, 1st Baron Keynes,[1] CB, FBA (/ˈkeɪnz/ KAYNZ; 5 June 1883 – 21 April 1946) was a British economist whose ideas have fundamentally affected the theory and practice of modern macroeconomics, and informed the economic policies of governments.
He built on and greatly refined earlier work on the causes of business cycles, and is widely considered to be one of the founders of modern macroeconomics and the most influential economist of the 20th century.[2][3][4][5] His ideas are the basis for the school of thought known as Keynesian economics, and its various offshoots. In 1999, Time magazine included Keynes in their list of the 100 most important and influential people of the 20th century, commenting that: "His radical idea that governments should spend money they don't have may have saved capitalism. "[10] He has been described by The Economist as "Britain's most famous 20th-century economist. Early life and education[edit] King's College, Cambridge. Career[edit] Keynesian Economics. "At research seminars, people don't take Keynesian theorising seriously anymore; the audience starts to whisper and giggle to one another.
" So declared Robert Lucas of the University of Chicago, writing in 1980. At the time, Lucas was arguably the world's most influential macroeconomist; the influence of John Maynard Keynes, the British economist whose theory of recessions dominated economic policy for a generation after the Second World War, seemed to be virtually at an end. Keynes: The Return of the Master by Robert Skidelsky But Keynes, it turns out, is having the last giggle.
Lucas's "rational expectations" theory of booms and slumps has shown itself to be completely useless in the current world crisis. Not only does it offer no guide for action, but it more or less asserts that market economies cannot possibly experience the kind of problems they are, in fact, experiencing. How far should we be willing to follow Skidelsky in this? No matter. Conservative Policy Research and Analysis. 'We've got to spend our way out of this recession' The U.S. government must spend its way out of the recession, the Democrats' third-ranking House leader stressed Monday. Rep. James Clyburn (D-S.C.), the House majority whip, said that trying to find greater savings in the budget, which was released by President Barack Obama this morning, wouldn't help alleviate the recession.
"We've got to make some decisions here as to what's in the best interests of our country going forward," Clyburn said during an appearance on Fox News. "And I think the best interest is to invest in education, control these deficits, while at the same time trying to get people back to work. " "We're not going to save our way out of this recession," the majority whip added. Obama's budget, which was unveiled Monday morning, calls for $3.8 trillion in spending for 2010, but is projected to cause a $1.27 deficit. Clyburn suggested that talk of reducing the deficit was moot as long as the economy remained sluggish in the foreseeable future. The Greatest Economic Myth of the Century. My candidate for “greatest economic myth of the century” was popularized by British economist John Maynard Keynes in the 1930s.
He thought that massive government spending would halt recessions and lead to prosperity. The myth here is that government spending, i.e. the extracting of dollars from taxpayers and then handing them out to key groups by politicians, helps the economy as a whole. Keynes worded his theory this way: “To dig holes in the ground, paid for out of savings, will increase not only employment, but the real national dividend of useful goods and services.” Keynes’s idea that government spending, even just digging holes, will lead to prosperity was discredited shortly after he announced it in 1935 during the Great Depression.
Despite the highest level of peacetime government spending in U. S. history, the Great Depression persisted in the U. S., and President Roosevelt even had 20.7% unemployment in 1939, late in his second term. Keynes was right on one point. Burton W. Folsom, Jr. Burton W. Folsom, Jr. (born 1947 in Nebraska) is an American historian and author who holds the Charles F. Kline chair in history and management at Hillsdale College. Biography[edit] Folsom received his BA from Indiana University in 1970, his M.A. from the University of Nebraska in 1973, and his doctorate in history from the University of Pittsburgh in 1976. Folsom is a former associate of the Free Enterprise Institute and the Mackinac Center for Public Policy, both free market think tanks, and a frequent guest of the libertarian organization Foundation for Economic Education.
Writings[edit] In his book The Myth of the Robber Barons, Folsom distinguishes between political entrepreneurs who ran inefficient businesses supported by government favors, and market entrepreneurs who succeeded by providing better and lower-cost products or services, usually while facing vigorous competition. Folsom identifies the following people as market entrepreneurs: Bibliography[edit] [edit] Hillsdale College. Hillsdale College is a co-educational liberal arts college in Hillsdale, Michigan, United States.National Review has described Hillsdale as a "citadel of American conservatism.
"[2][3] Most of the curriculum is based on and centered around the teaching of the Western heritage as a product of both the Greco-Roman culture and the Judeo-Christian tradition. Hillsdale requires every student, regardless of major, to complete a core curriculum that includes courses on the Great Books and the U.S. Constitution.[4] History[edit] Founding and early history[edit] Hillsdale in the nineteenth century Hillsdale College was established as Michigan Central College in Spring Arbor, Michigan, on December 4, 1844. Hillsdale was founded by Freewill Baptists. Black students were admitted immediately after the college's 1844 founding,[7] and the College became the second school in the nation to grant four-year liberal arts degrees to women.[8] College presidents[edit] Dr.
Academics[edit] Campus[edit] Policies[edit]
Keynesian Economics. John Maynard Keynes.