I agree with what Amity Shlaes
says, in her last post
, about the immediate future: the pressure is now on for even more deficit reduction. But her rosy view of Newt Gingrich
and the 1990s leaves a lot out.
First, wind back the clock to the summer of 1993, when Bill Clinton
was a new president and the Democrats had control of Congress. Building on the historic budget deal that President George H.W. Bush completed in 1990 (Republicans hated it because he went back on his "read my lips" pledge, but it began a decade of fiscal responsibility), Clinton fought for his own budget. It included tax increases to bring down the deficit.
By Amity Shlaes Aug 1, 2011 10:22 AM GMT+0000 Comments
Thank goodness for Mitch McConnell
. Thank goodness Republicans in Congress didn't "pull a Newt." Welcome, Clinton Era II.
That's the conventional wisdom about the budget deal reached July 31. Commentators are emphasizing the statesmanship of the Senate minority leader. Without the Kentucky senator's diplomacy, the radicals in the Grand Old Party might have played too rough and shut down the government, as House Speaker Newt Gingrich
did in the 1990s, rather than giving in to President Bill Clinton
on the budget.
By John B. Taylor Jul 31, 2011 1:48 PM GMT+0000 Comments
The debt-limit battle of 10 years ago still echoes, but a new ring of accomplishment can also be heard.
I was Treasury Undersecretary in 2001 when the recession and the impact of the Sept. 11 terrorist attacks required the first debt-limit hike in four years. Treasury made the request to Congress in early December, and, unsurprisingly, Congress tabled it at first. A vote to raise the debt ceiling has never been popular.
By Ike Brannon Jul 28, 2011 1:13 PM GMT+0000 Comments
In reality the fight over whether the spending reductions to be obtained in return for increasing the debt limit are sufficient is spurious: the cuts in discretionary spending of the sort being tossed around represent reductions in projected spending years into the future that are subject to revision by a future Congress and Administration, and most of those reductions aren't due to happen for years anyway, making them even more tenuous.
However, House Speaker John Boehner's plan also calls for yet another commission to be charged with looking for ways to further reduce spending, and whose purview would include entitlements. Despite our collective frustration with yet another commission, this is the only development that truly bodes well for reducing the budget, because it represents the only avenue by which we can reduce entitlement spending.
By Amity Shlaes and Joseph J. Thorndike Jul 25, 2011 9:55 AM GMT+0000 Comments
A sanctimonious president refuses lawmakers the cuts they demand. The federalists in Congress grow cocky. They'd rather force a bond-market crisis than raise the debt ceiling or erode states' rights.
"I'm not worrying," the firebrand Virginian leading the opposition to the president says, and charts his own version of the budget. "I'm sticking to my guns. We've got a prairie fire started among the people in favor of cutting the budget."
By Amity Shlaes and Ilan Kolet Jul 22, 2011 7:03 AM GMT+0000 Comments
The IMF, discussed here
this week, was key in preventing a much broader economic crisis after the financial turmoil of 2008. Year-to-date IMF credit outstanding, which measures active borrowing, among other things, has since increased to record levels. The fund has revamped its lending program and was able to quickly approve loans for countries in distress, most notably Greece and Ireland.
Once the global economy regains strength, how should the role of the fund evolve? And what can it do to prevent burgeoning bailouts in the future?
By Joseph J. Thorndike Jul 22, 2011 6:23 AM GMT+0000 Comments
Lagarde's pay has drawn some scrutiny to the IMF's perks, and not for the first time. Critics have complained for decades that the fund's employees (and their counterparts at the World Bank) are allowed to live large
at taxpayer expense.
By Amity Shlaes Jul 18, 2011 11:21 AM GMT+0000 Comments
Men are from Mars, but the IMF is from Venus. Or should be. That’s the message the International Monetary Fund’s new managing director, Christine Lagarde, delivered when she was campaigning for the job.
"If I were elected as managing director," Lagarde said, "I would stand on my feet as a woman, not necessarily with a pair of trousers, and certainly with a level of testosterone that would be lower than many in the room today."
By Nikolai Krylov Jul 15, 2011 6:48 AM GMT+0000 Comments
As the debt-limit debate heats up in Congress, we're hearing a lot of talk about how much the government spends. The more pertinent question is how much it spends in relation to the overall economy.
A look at this chart shows just how high that figure has climbed. Total federal expenditures as a share of the national economy dropped drastically after World War I. They kept creeping downward through the 1920s before rising in the 1930s and ballooning during World War II. The end of that war ushered in another big decline.
By Nikolai Krylov Jul 15, 2011 6:34 AM GMT+0000 Comments
Since the early 1980s, the only time when the federal debt has declined as a share of gross domestic product was from 1997 to 2001, during President Bill Clinton
's second term. As officials in the White House today struggle to turn the economy around, one book they might pick up is Clinton's 2004 memoir, "My Life
It's tempting to look back on the Clinton years as a halcyon era. During his eight years in office, the economy expanded almost 4 percent annually. The unemployment rate
fell to 4.7 percent in January 2001, when Clinton left office, from 8 percent in January 1993, when he took over as president. The federal budget went to a surplus of $128.2 billion in 2001 from a deficit of $203.2 billion in 1994, the first year for which Clinton signed appropriations bills. By 2000, federal debt as a percent of GDP had fallen
to 57.3 percent from 66.1 percent in 1993.
JOSEPH J THORNDIKE
Thorndike is the director of the Tax History Project at Tax Analysts and a visiting scholar in history at the University of Virginia.
JOHN B TAYLOR
Taylor is the Mary and Robert Raymond Professor of Economics at Stanford University and the George P. Shultz Senior Fellow in Economics at the Hoover Institution. From 2001 to 2005, he served as the Under Secretary of the Treasury for International Affairs.
Kolet is a data editor in the Ottawa office of Bloomberg News. From 2002 to 2010 he served as a senior economist at the Bank of Canada covering the U.S. economy and commodity prices.
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