A Fiscal Cliff

New Perspectives on the U.S. Federal Debt Crisis

The unsustainable, and still rapidly growing, U.S. federal government debt is a classic case of ‘‘in denial.” Despite numerous congressional committees, bipartisan commissions, and votes, we are no closer to a solution to the debt crisis than we were more than a decade ago. In this timely volume, scholars and policymakers assess the United States’ fiscal constraints and provide new perspectives that are desperately needed in order to solve the nation’s debt crisis.

By John Merrifield and Barry W. Poulson

The unsustainable, and still rapidly growing, U.S. federal government debt is a classic case of ‘‘in denial.” Despite numerous congressional committees, bipartisan commissions, and votes, we are no closer to a solution to the debt crisis than we were more than a decade ago. In fact, in 2018, a congressional committee was appointed to recommend budget process reforms, but that committee could not agree on any recommendations to submit to Congress.

In this timely volume, scholars and policymakers assess the United States’ fiscal constraints and provide new perspectives that are desperately needed in order to solve the nation’s debt crisis. Previous recommendations focused on the outcomes of fiscal policy but perhaps we should take a step back and ask whether the fiscal and budget process rules themselves should be reformed. The essays in A Fiscal Cliff suggest that “unless we reform our fiscal rules and institutions, we are not likely to solve the debt crisis and restore sustainable fiscal policies.” Topics discussed include

  • Historical perspectives on the origins and the pre‐​pandemic state of the crisis

  • In‐​depth, international perspectives on the U.S. debt crisis

  • Fiscal policy reforms designed to significantly reduce deficits and debt

  • Reforms to the budget process, including transparency, accountability, and constraints

  • The U.S. debt examined through the lens of public choice theory

While the dominant sentiment is that maybe if we ignore it, it will just go away, the debt crisis will not just vanish. A Fiscal Cliff is a timely addition to a critical policy discussion.

Praise for “A Fiscal Cliff”

A Fiscal Cliff is precisely the right book for perilous fiscal times. Giants in economics and public policy offer a spirited defense of fiscal rules critically needed to protect our children and grandchildren from a bleak future.”
— Richard K. Vedder, Distinguished Professor of Economics Emeritus, Ohio University

“The unsustainability of the federal budget is one of the nation’s most pressing problems. A Fiscal Cliff, edited by two leading scholars of government budgeting in John Merrifield and Barry Poulson and featuring contributions from many of the nation’s foremost experts on fiscal policy, provides this vital topic the treatment deserves. This volume should be a guide to policymakers to implement fiscal rules that will constrain overspending and debt, ensuring the American dream for generations to come.”
—Matthew D. Dickerson, policy manager, Americans for Prosperity

“This book includes a number of essays from a range of scholars who provide their personal views on the nature and scope of our fiscal challenges, lessons from others, and possible solutions. I hope this book will serve to stimulate some much needed and long overdue discussion regarding how best to put our nation’s finances in order so that our future can be better than our past.”
—David Walker, U.S. Comptroller General, 1998–2008

About the Editors and Contributors

John Merrifield is professor emeritus of economics at the University of Texas at San Antonio. He coedits the Non‐​Partisan Education Review and writes on topics as wide‐​ranging as education economics, urban and regional economics, environmental and natural resource economics, and public finance. Barry Poulson is professor emeritus at the University of Colorado Boulder and a visiting professor at several universities, including University of North Carolina; Cambridge University; and Universidad Carlos Tercera, Madrid, Spain. His main area of expertise is economic development and economic history.

Contributors include: Chris Edwards, Ryan Bourne, Romina Boccia, Xavier DeBrun, Lars Jonung, Ed Dolan, Kurt Couchman, Baker Spring, Nick Loris, John Garren, Justin Bogie, Marvin Phaup, Richard M. Salsman, Richard E. Wagner, and David J. Herbert.

Table of Contents

Foreword, David Walker

Preface, Barry Poulson

Introduction

  1. The Federal Fiscal Crisis: An Overview, John Merrifield
  2. Federal Debt in Historical Perspective, Chris Edwards
  3. The Debt Crisis in International Perspective, Barry Poulson
  4. International Experience with Fiscal Rules, Ryan Bourne
  5. The United States vs. Switzerland and Sweden: Three Approaches to Fiscal Restraint, Romina Boccia
  6. Under Threat: Rules‐​Based Fiscal Policy and How to Preserve It, Xavier Debrun and Lars Jonung
  7. Rules for Sustainable Fiscal Policy: Three Perspectives, Ed Dolan
  8. Effective Fiscal Rules Build on Consensus, Kurt Couchman
  9. Minutes from Midnight: Growing Pressure on the Treasury Market Could Lead to Default, Baker Spring
  10. Fiscal Rules, Fiscal Policy, and Debt: A Dynamic Simulation Analysis, John Merrifield and Barry Poulson
  11. Debt Reduction without Higher Taxes: Gradual Privatization of Federal Mineral Assets, Nick Loris
  12. Social Security and Medicare Spending Growth: Is It Just More Seniors or More Per Senior?, John Garen
  13. Curb Rising Disaster and Emergency Spending, Justin Bogie
  14. Improving Transparency and Accountability in Federal Budgeting, Romina Boccia
  15. Federal Budget Process Reform: Adding a Resource Constraint and Improving Cost Measurement, Marvin Phaup
  16. The Golden Rule of Public Finance and Prospects for Its Revival, Richard M. Salsman
  17. Administration vs. Politics in Theories of Democratic Budgeting, Richard E. Wagner
  18. Why Deficits?, David J. Hebert
  19. Fiscal Federalism and Dynamic Credence Capital in the United States, John Merrifield and Barry Poulson
  20. Controlling Government Spending: The Difficulty and the Hope, Dwight Lee