[lbo-talk] Tuff Lib'rul

Max B. Sawicky sawicky at bellatlantic.net
Thu Jan 29 15:21:06 PST 2004


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 ___________________________________ http://mailman.lbo-talk.org/mailman/listinfo/lbo-talk



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