Tuesday, April 5, 2011

Facing the return to fiscal sanity

A historical perspective on the current insanity

By Kenneth Rogoff

...Normalising fiscal policy in the long aftermath of a deep financial crisis is a delicate task. The key is to see the bigger picture. Even if today’s government bonds seem pristine by the standards of pre-revolutionary France, future scholars will see our tax systems as Byzantine labyrinths funnelling money to powerful interests, creating staggering inefficiencies. They will surely be incredulous to see pensions and health insurance financed via Ponzi schemes as transparently unsustainable as the 1700s South Sea bubble. And will they believe that, back in the 21st century, there was no mechanism for putting insolvent financial institutions into bankruptcy? ...

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U.S. Republicans propose $6 trillion budget


By Bridget Johnson

House Budget Committee Chairman Paul Ryan will warn at AEI today that the country is at a “tipping point” in its debt crisis that threatens to “curtail free enterprise” and lead to a “gradual moral-political decline as dependency and passivity weaken the nation’s character.”

The Wisconsin Republican detailed in today’s Wall Street Journal the magic numbers everyone has been waiting for: $6.2 trillion in cuts from President Obama’s budget over the next decade; $4.4 trillion in deficit reduction, as compared to Obama’s promised $1.1 trillion. ...

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