Slowing economic growth and debt fatigue continue to hamper fiscal policy in the United States. The question is whether there is an alternative path to the one projected in CBO long term forecasts, and if so, how citizens can choose this alternative path. The experiences of Germany, Sweden, and Switzerland reveal that an alternative path of sustainable debt is possible, and that citizens in a democratic society are capable of choosing that path. This book explores the potential impact of Swiss-style fiscal rules on the U.S. budget and the economy over the next three decades. The dynamic simulation analysis reveals that with these fiscal rules in place, it is possible for the U.S. to stabilize and reduce debt to sustainable levels over the forecast period. The government must preserve policy credibility by demonstrating a commitment to meet the challenges of economic shocks. The recent economic crises have provided a learning experience, and the rules-based macroeconomic framework required for this new era may differ significantly from that of the past. With new fiscal rules in place, the U.S. can restore long term economic growth. However, empirical analysis reveals how difficult this challenge will be, and why the U.S. is likely to continue to experience debt fatigue.
Barry W. Poulson is emeritus professor of economics at the University of Colorado.
John Merrifield is head of the Institute for Objective Policy Assessment and was a member of the faculty at the University of Texas at San Antonio for 32 years.
Chapter 1. Debt Fatigue and Debt Sustainability in Historical Perspective
Chapter 2. Understanding the U.S. Debt Crisis
Chapter 3. Debt Fatigue in the U.S. as a Failure of Macroeconomic Policy
Chapter 4. The Zombies are Coming
Chapter 5. A Look Back at the New Era of Fiscal Rules
Chapter 6. 2nd Generation Fiscal Rules for the U.S.
Chapter 7. The Merrifield-Poulson Rules for Restoring a Great Moderation in Fiscal Policy
Chapter 8. Institutional Reforms to Restore a ‘Great Moderation’ in Monetary and Fiscal Policy: The Friedman Solution
This book reveals the authors' strong understanding of fiscal restraint. Calling for a return to historical and rational policies, the authors argue against the positions that today’s politicians and electorate favor. Beginning with the debt incurred when the US was newly founded and continuing through the COVID-19 crisis, Poulson and Merrifield uncover the shift from rational economic policies in the US to a form of economic reasoning that tries to do the right thing based on compassion toward others… This book provides insights into this subject matter that challenge and distinguish it from many college-level textbooks. It is written in a clear and concise manner, and the authors lucidly explain academic jargon, terms, formulas, and graphs, offering both lay readers and new students of economics a broad understanding of the subject matter. Recommended. Undergraduates through faculty and general readers.
Restoring Sustainable Macroeconomic Policies is an excellent primer on the state of America's fiscal woes. The book is especially useful for individuals who are relatively new to fiscal and monetary policy or do not regularly follow economic news. It can also serve as a great reference and historical timeline for individuals more knowledgeable about fiscal and monetary policy.
Poulson and Merrifield illuminate the hidden, but exorbitant, social cost of current U.S fiscal policy and identify a sustainable, pro-growth, Federalist founders-inspired alternative. A must read for policy makers and staff.
Restoring Sustainable Macroeconomic Policies in the U.S. is a masterful indictment of the United States’ delusions on deficits and debt. Poulson and Merrifield argue their case for fiscal sanity with such verve and lucidity that even politicians and journalists may follow with little difficulty and much profit.
Most American voters, and most American policy makers, recognize that the federal government’s deficit spending is generating unsustainable growth in the national debt, yet deficit spending continues unchecked. Barry Poulson and John Merrifield explain why deficit spending continues, and offer commonsense policy recommendations to bring deficit spending under control.
This is an excellent and timely book on the growing problem of U.S. government debt. Restoring Sustainable Macroeconomic Policies in the U.S. provides a wide-ranging and noteworthy discussion of the history of U.S. debt, the politics that drive it, and prospects for restraining it. Poulson and Merrifield make a compelling case for "rules-based" reform that constrains political dysfunction, while providing thoughtful and careful examples. A first-rate contribution.
Restoring Sustainable Macroeconomic Policies in the U.S. is a masterful indictment of the
United States’ delusions on deficits and debt. Poulson and Merrifield argue their case for fiscal sanity with such verve and lucidity that even politicians and journalists may follow with little difficulty and much profit.
5/25/23, Choice Reviews: This title is included in a roundup of “The Top 75 Community College Titles: May 2023 Edition.”