[lbo-talk] Tuff Lib'rul

[Max B. Sawicky]

The point is that such a course is sustainable
over the long run.  It still allows for short-
run stimulus -- you go over the debt/GDP ratio
in recessions, under otherwise.  Rather than
balance the budget around zero over the business cycle,
you balance it around the debt/GDP ratio.

The incidence of the interest payments needs
to set against the incidence of the
benefits the borrowing financed.  Naturally
you can be in a world where regressive spending
is financed with regressive taxes.  But you
could have this in a balanced budget framework
as well.  In this case, all the borrowing does
is postpone (but not reduce) the regressive bite
on the revenue side.

If we expect nothing good in the way of government
spending, we should be for limited government.

mbs

-----Original Message-----
From: lbo-talk-bounces at lbo-talk.org
[mailto:lbo-talk-bounces at lbo-talk.org]On Behalf Of Doug Henwood
Sent: Thursday, January 29, 2004 6:08 PM
To: lbo-talk at lbo-talk.org
Subject: RE: [lbo-talk] Tuff Lib'rul

Max B. Sawicky wrote:


>One progressive alternative to this position is that
>deficits may continue indefinitely as long as debt
>does not grow more rapidly than GDP.

What's the point of them then? They inject no stimulative power, and 
the government still wastes money paying interest to rich people. Or 
would you argue that providing a Treasury market is a public good?

Doug
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