Debt & Deficit

Research

Defense Spending and the Economy Robert J. Barro , Veronique de Rugy \| May 07, 2013 While the impact of across-the-board federal defense-spending cuts on national security may be up for debate, claims of these cuts’ dire impact on the economy and jobs are grossly overblown.	The Case for Across-the-Board Spending Cuts Jeff Bergner \| Mar 26, 2013 Across-the-board cuts are often referred to as using a “meat ax,” as opposed to more carefully targeted cuts, which are compared to using a “scalpel.” Interest group pressure will weigh in against targeted cuts, however, and especially in our current divided government, across-the-board cuts are the only realistic way to cut spending.
Austerity: The Relative Effects of Tax Increases versus Spending Cuts Veronique de Rugy, Alberto Alesina \| Mar 07, 2013 There is still significant debate about the short-term economic impact of fiscal adjustments. However, as we will show in this paper, important lessons have emerged.	The Economic Situation, March 2013 Bruce Yandle \| Mar 01, 2013 There was only one lane open as I made my trip to Atlanta; the other three were blocked with those unhappy yellow and black make-believe barrels used by the highway folks. Traffic flow was constrained by efforts to repair potholes and broken pavement. We in the slow lane had little choice in the matter. Instead of 70, we were slowed to 20 miles per hour. We had to accept our fate, or find another route at the next exit.
In Search of Austerity: An Analysis of the British Situation Anthony Evans \| Oct 15, 2012 This paper intends to provide a basic overview of the fiscal position of the United Kingdom. The 2008–2009 recession has been deeper and more sustained than the two previous recessions (in 1990–91 and 1979–81).	The Economic Situation, September 2012 Bruce Yandle \| Sep 11, 2012 The U.S. economy has not been healthy since 2001 when 9/11 pushed the country into a recession. As the accompanying data tell us, real GDP growth has risen to meet the long-term average of 3.11 percent just once since 2001, and that was in 2004. The combination of wars, financial collapse, natural disasters, and political games has taken a heavy toll on economic growth. No one is talking about 3 percent or better growth anytime in the foreseeable future. But it’s not just about Democrats and Republicans. It’s about something deep in the economy.

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Testimony & Comments

What the Euro Crisis Means for Taxpayers and the U.S. Economy Anthony B. Sanders \| Dec 15, 2011 Anthony Sanders testified before the U.S. House Committee on Oversight and Government Reform Subcommittee on TARP, Financial Services and Bailouts of Public and Private Programs on the role of the U.S. in addressing the European debt crisis.	Should the Constitution be Amended to Address the Federal Deficit? David M. Primo \| May 13, 2011 David Primo testified before the House Committee on the Judiciary on whether the Constitution should be amended to address the federal deficit.
Wasteful Spending Does Not Stop at Earmarks and Overpayments Veronique de Rugy \| Feb 17, 2011 Veronique de Rugy testified before the House Committee on Oversight and Government Reform about wasteful government spending.	The Nation's Mid and Long-Term Fiscal Challenges Veronique de Rugy \| Jun 30, 2010 Well over a decade of irresponsible fiscal policy has created an unsustainable fiscal situation for the United States. The longer we delay serious consideration of meaningful solutions, the larger the problem will become.
Oversight of Federal Financial Management Veronique de Rugy \| Apr 14, 2010 In a testimony before the House Committee on Oversight and Government Reform, Subcommittee on Government Management, Organization, and Procurement, Mercatus Center's Senior Research Fellow, Veronique de Rugy anlyzes America’s unsustainable financial situation.

Research Summaries & Toolkits

The FY 2014 Budget Proposals Veronique de Rugy, Jason J. Fichtner, Charles Blahous, Matthew Mitchell \| Mar 15, 2013 Despite years without a federal budget, trillion-dollar deficits, and ad hoc, crisis-driven fiscal and economic policies that failed to deal with the looming entitlement crisis, leaders on both sides in Washington are now touting seemingly miraculous progress toward a “fix” to our budgetary woes.	The Debt Ceiling: Assets Available to Prevent Default Jason J. Fichtner, Veronique de Rugy \| Jan 25, 2013 The debt ceiling, or the legal limit the federal government may borrow, is set currently at $16.4 trillion.[1] In his latest report, Secretary of the Treasury Timothy Geithner predicts that the United States will need to increase the debt ceiling sometime between February 15, 2013, and early March 2013.[2] The Congressional Research Service estimates the federal government will have to issue an additional $700 billion in debt above the current statutory limit to finance obligations for the remainder of FY2013…
Mercatus Center Policy Guide \| Aug 03, 2012 The Mercatus Center at George Mason University is pleased to provide you with our new policy guide. The guide is designed to provide easily accessible economic information that might prove useful in pre- paring for hearings or town hall meetings, drafting speeches or policy papers, and generally educating the public regarding spending, taxes, regulation, financial markets, and technology policy.	Assessing the President's FY2013 Budget Proposal \| Feb 13, 2012 This policy brief takes a look at the president's FY2013 budget proposal and emphasizes the need for fundamental reform in the areas of spending, taxes, and the budget process.
The Essential Stimulus Veronique de Rugy \| Sep 09, 2011 The American Recovery and Reinvestment Act was heralded with promises of jobs and economic growth. In retrospect, how well has it fulfilled those promises?	The Real Debt Crisis: What Can Be Done? Matthew Mitchell \| Jul 29, 2011 On July 14, Standard & Poor's (S&P) issued a warning to Washington: within months, policy makers must craft a "credible solution" to reduce deficits by at least $4 trillion over the next 10 to 12 years.

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Expert Commentary

Let Cyprus Be the Lesson Pittsburgh Tribune-Review By Antony Davies, James R. Harrigan \| Mar 22, 2013 How can the United States avoid the fate that awaits this growing list of countries? The answer to this question is as easy factually as it is difficult politically: The United States must balance its budget.	Give Sequestration a Chance Washington Examiner By Veronique de Rugy \| Mar 08, 2013 There's been lots of alarmism from interest groups about the impact of sequestration on teachers, security, White House tourism and congressional janitors. In addition, many commentators are arguing that it is wrong to reduce the burden of government spending in a weak economy -- no matter how small the actual cuts are. The evidence of the supposedly devastating impact of spending cuts, we are told, can be seen all over Europe. The solution, then, is to boost the size of government.
There Is Good And Bad Austerity, And Italy Chose Bad Forbes By Veronique de Rugy, Alberto Alesina \| Mar 07, 2013 Italy’s election outcome is not, as the critics claim, the resounding death knell of austerity economics in Europe. Nor does it spell the end of it in Italy. There is “austerity” and there is austerity.	Bowles-Simpson 2.0 Won't Be Enough Washington Examiner By Veronique de Rugy \| Feb 22, 2013 Recent Congressional Budget Office projections show that the deficit will be roughly $1 trillion and the debt will reach 77 percent by 2023. And these calculations rely on rosy assumptions that won't materialize, even though the worst is still to come. It means that even if Simpson and Bowles get their way, much bolder reforms would be needed to fix our long-term debt problem.
Ten Things the Latest CBO Report Tells Us About Federal Finances e21 By Charles Blahous \| Feb 07, 2013 Earlier this week the Congressional Budget Office (CBO) released its updated outlook for the federal budget. Here are ten lessons it teaches us about the troubled state of federal finances.	Nips and Tucks and Big Budget Cuts The New York Times By Tyler Cowen \| Feb 02, 2013 Unless lawmakers act by March 1, the budget sequestration process will start cutting government spending automatically — reductions that would amount to $1.2 trillion by 2021. Congress and the White House agreed in 2011 to the sequestration, and many people see it as a kind of political gimmick.

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Charts

Public Debt Under Various FY 2014 Proposals

The recent release of budget plans for fiscal year 2014 makes a proper perspective of projections of public debt even more important. This week’s chart shows the debt held by the public as a percentage of the gross domestic product (GDP) under various budget proposals.

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Experts

Charles Blahous

Charles Blahous is a senior research fellow at the Mercatus Center and public trustee for Medicare and Social Security. His primary research interests include retirement security, with an emphasis on Social Security and employer-provided defined benefit pensions, as well as federal fiscal policy, entitlements, demographic change, economic stimulus, financial market regulation, and health care reform.

Antony Davies

Antony Davies is associate professor of economics at Duquesne University and Mercatus Affiliated Senior Scholar at George Mason University. His primary research interests include econometrics, public policy, and economic psychology.

Veronique de Rugy

Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University. Her primary research interests include the federal budget, homeland security, taxation, tax competition, and financial privacy issues.

Jason J. Fichtner

Jason J. Fichtner is a senior research fellow at the Mercatus Center. His primary research interests include Social Security, federal tax policy, federal budget policy, retirement security, and policy proposals to increase saving and investment.

Matthew Mitchell

Matthew Mitchell is a senior research fellow at the Mercatus Center at George Mason University and the lead scholar on the Project for the Study of American Capitalism. His primary research interests include economic freedom and economic growth, public choice economics, and the economics of government-granted privileges to businesses.

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Videos

Veronique de Rugy Discusses Sequestration on Stossel

Veronique de Rugy | February 28, 2013

Veronique de Rugy Discusses the Country's Spending Problem on The Blaze

Veronique de Rugy | February 13, 2013

Podcasts

The FY 2014 ‘Budget’: The Proposals and Where We Go from Here

Jason J. Fichtner | April 30, 2013

This Capitol Hill Campus event covered the president’s and Congress’s fiscal year 2014 budget proposals—and whether any of the proposals adequately address the nation’s long-term budget challenges.

Download the MP3

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Recent Events

Behind the Numbers: Understanding the President's FY 2013 Budget Submission to Congress

Please join the Mercatus Center’s Capitol Hill Campus and Senior Research Fellow Jason Fichtner for a discussion on President Obama's FY 2013 budget submission to Congress.

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More Media Clippings

Defense Spending and the Economy Robert J. Barro , Veronique de Rugy \| May 07, 2013 While the impact of across-the-board federal defense-spending cuts on national security may be up for debate, claims of these cuts’ dire impact on the economy and jobs are grossly overblown.	The Case for Across-the-Board Spending Cuts Jeff Bergner \| Mar 26, 2013 Across-the-board cuts are often referred to as using a “meat ax,” as opposed to more carefully targeted cuts, which are compared to using a “scalpel.” Interest group pressure will weigh in against targeted cuts, however, and especially in our current divided government, across-the-board cuts are the only realistic way to cut spending.
Austerity: The Relative Effects of Tax Increases versus Spending Cuts Veronique de Rugy, Alberto Alesina \| Mar 07, 2013 There is still significant debate about the short-term economic impact of fiscal adjustments. However, as we will show in this paper, important lessons have emerged.	The Economic Situation, March 2013 Bruce Yandle \| Mar 01, 2013 There was only one lane open as I made my trip to Atlanta; the other three were blocked with those unhappy yellow and black make-believe barrels used by the highway folks. Traffic flow was constrained by efforts to repair potholes and broken pavement. We in the slow lane had little choice in the matter. Instead of 70, we were slowed to 20 miles per hour. We had to accept our fate, or find another route at the next exit.
In Search of Austerity: An Analysis of the British Situation Anthony Evans \| Oct 15, 2012 This paper intends to provide a basic overview of the fiscal position of the United Kingdom. The 2008–2009 recession has been deeper and more sustained than the two previous recessions (in 1990–91 and 1979–81).	The Economic Situation, September 2012 Bruce Yandle \| Sep 11, 2012 The U.S. economy has not been healthy since 2001 when 9/11 pushed the country into a recession. As the accompanying data tell us, real GDP growth has risen to meet the long-term average of 3.11 percent just once since 2001, and that was in 2004. The combination of wars, financial collapse, natural disasters, and political games has taken a heavy toll on economic growth. No one is talking about 3 percent or better growth anytime in the foreseeable future. But it’s not just about Democrats and Republicans. It’s about something deep in the economy.

What the Euro Crisis Means for Taxpayers and the U.S. Economy Anthony B. Sanders \| Dec 15, 2011 Anthony Sanders testified before the U.S. House Committee on Oversight and Government Reform Subcommittee on TARP, Financial Services and Bailouts of Public and Private Programs on the role of the U.S. in addressing the European debt crisis.	Should the Constitution be Amended to Address the Federal Deficit? David M. Primo \| May 13, 2011 David Primo testified before the House Committee on the Judiciary on whether the Constitution should be amended to address the federal deficit.
Wasteful Spending Does Not Stop at Earmarks and Overpayments Veronique de Rugy \| Feb 17, 2011 Veronique de Rugy testified before the House Committee on Oversight and Government Reform about wasteful government spending.	The Nation's Mid and Long-Term Fiscal Challenges Veronique de Rugy \| Jun 30, 2010 Well over a decade of irresponsible fiscal policy has created an unsustainable fiscal situation for the United States. The longer we delay serious consideration of meaningful solutions, the larger the problem will become.
Oversight of Federal Financial Management Veronique de Rugy \| Apr 14, 2010 In a testimony before the House Committee on Oversight and Government Reform, Subcommittee on Government Management, Organization, and Procurement, Mercatus Center's Senior Research Fellow, Veronique de Rugy anlyzes America’s unsustainable financial situation.

The FY 2014 Budget Proposals Veronique de Rugy, Jason J. Fichtner, Charles Blahous, Matthew Mitchell \| Mar 15, 2013 Despite years without a federal budget, trillion-dollar deficits, and ad hoc, crisis-driven fiscal and economic policies that failed to deal with the looming entitlement crisis, leaders on both sides in Washington are now touting seemingly miraculous progress toward a “fix” to our budgetary woes.	The Debt Ceiling: Assets Available to Prevent Default Jason J. Fichtner, Veronique de Rugy \| Jan 25, 2013 The debt ceiling, or the legal limit the federal government may borrow, is set currently at $16.4 trillion.[1] In his latest report, Secretary of the Treasury Timothy Geithner predicts that the United States will need to increase the debt ceiling sometime between February 15, 2013, and early March 2013.[2] The Congressional Research Service estimates the federal government will have to issue an additional $700 billion in debt above the current statutory limit to finance obligations for the remainder of FY2013…
Mercatus Center Policy Guide \| Aug 03, 2012 The Mercatus Center at George Mason University is pleased to provide you with our new policy guide. The guide is designed to provide easily accessible economic information that might prove useful in pre- paring for hearings or town hall meetings, drafting speeches or policy papers, and generally educating the public regarding spending, taxes, regulation, financial markets, and technology policy.	Assessing the President's FY2013 Budget Proposal \| Feb 13, 2012 This policy brief takes a look at the president's FY2013 budget proposal and emphasizes the need for fundamental reform in the areas of spending, taxes, and the budget process.
The Essential Stimulus Veronique de Rugy \| Sep 09, 2011 The American Recovery and Reinvestment Act was heralded with promises of jobs and economic growth. In retrospect, how well has it fulfilled those promises?	The Real Debt Crisis: What Can Be Done? Matthew Mitchell \| Jul 29, 2011 On July 14, Standard & Poor's (S&P) issued a warning to Washington: within months, policy makers must craft a "credible solution" to reduce deficits by at least $4 trillion over the next 10 to 12 years.

Let Cyprus Be the Lesson Pittsburgh Tribune-Review By Antony Davies, James R. Harrigan \| Mar 22, 2013 How can the United States avoid the fate that awaits this growing list of countries? The answer to this question is as easy factually as it is difficult politically: The United States must balance its budget.	Give Sequestration a Chance Washington Examiner By Veronique de Rugy \| Mar 08, 2013 There's been lots of alarmism from interest groups about the impact of sequestration on teachers, security, White House tourism and congressional janitors. In addition, many commentators are arguing that it is wrong to reduce the burden of government spending in a weak economy -- no matter how small the actual cuts are. The evidence of the supposedly devastating impact of spending cuts, we are told, can be seen all over Europe. The solution, then, is to boost the size of government.
There Is Good And Bad Austerity, And Italy Chose Bad Forbes By Veronique de Rugy, Alberto Alesina \| Mar 07, 2013 Italy’s election outcome is not, as the critics claim, the resounding death knell of austerity economics in Europe. Nor does it spell the end of it in Italy. There is “austerity” and there is austerity.	Bowles-Simpson 2.0 Won't Be Enough Washington Examiner By Veronique de Rugy \| Feb 22, 2013 Recent Congressional Budget Office projections show that the deficit will be roughly $1 trillion and the debt will reach 77 percent by 2023. And these calculations rely on rosy assumptions that won't materialize, even though the worst is still to come. It means that even if Simpson and Bowles get their way, much bolder reforms would be needed to fix our long-term debt problem.
Ten Things the Latest CBO Report Tells Us About Federal Finances e21 By Charles Blahous \| Feb 07, 2013 Earlier this week the Congressional Budget Office (CBO) released its updated outlook for the federal budget. Here are ten lessons it teaches us about the troubled state of federal finances.	Nips and Tucks and Big Budget Cuts The New York Times By Tyler Cowen \| Feb 02, 2013 Unless lawmakers act by March 1, the budget sequestration process will start cutting government spending automatically — reductions that would amount to $1.2 trillion by 2021. Congress and the White House agreed in 2011 to the sequestration, and many people see it as a kind of political gimmick.