Category Archives: budget

Red States, Blue States and the Distribution of Federal Spending

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           April 1 is Census Day.  Evidently Glenn Beck and Michele Bachmann have been encouraging Americans to boycott the census — to refuse to fill out the whole form.   This protest follows from their small government ideology.

           I am not always sure what they, or Republicans, or Tea Party participants mean by small government.  They say they want a government that intervenes less in the economic sphere.   Perhaps they don’t like the idea that the census numbers are used, among other things, to determine the allocation of federal spending across states, because they don’t think it is the business of the government to redistribute income.  That is “socialism.”    Even “Stalinism.” read more

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Limit Tax Expenditures

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The National Journal asks for views on a recent proposal from Len Burman .  I couldn’t agree more with the idea:  we need to limit tax expenditures.  
 
With regard to the politics, one would have to see whether the phrase “cut tax expenditures” polls more like the phrase “cut expenditures,” which I assume polls well, or like the phrase “raise taxes,” which of course polls horribly.  I have no idea.  But at least there is a hope of breaking through the mindless artificial “Taxes versus Spending” rhetoric that dominates Washington. read more

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Achieving Long-Term Fiscal Discipline: A Lesson from Chile

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            As Chile’s President Michelle Bachelet prepares to hand over power to her newly elected successor, she remains extraordinarily popular.  It is worth reflecting on the fiscal aspects of her term in office, as Chile has important lessons for other countries struggling with fundamental long-term budget problems, which includes a lot of countries right now.

             As recently as June 2008, President Bachelet and her Finance Minister, Andres Velasco, had the lowest approval ratings of any President or Finance Minister, respectively, since the return of democracy to Chile. (See graphs below.) There may have been multiple reasons for this, but perhaps the most important was popular resentment that the two had resisted intense pressure to spend the receipts from copper exports, which at the time were soaring along with world copper prices.  One year later, in the summer of 2009, the pair had the highest approval ratings of any President and Finance Minister since the return of democracy.  Why the change?   read more

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