US Budget Research Articles

The European distaste for US budget deficits: A regime shift explanation

It is the general consensus that the chief stimulus to the European recovery from the 1982 recession was exports to the United States. It is therefore paradoxical that European official circles were critical of the swingeing US budget deficits throughout the 1980–85 period even though the budget deficits were the driving force behind the high US import demands. This paper argues that the European government had become more concerned with price stability and hence was obliged to pursue contractionary macro policies in order to offset the supply-side price pressure caused by the strong dollar. The Europeans were unhappy with the US budget deficits because they would have benefited more if the US recovery had been maintained by looser monetary but tighter fiscal policies. The contributions of this paper are: one, showing how a standard macro model can be modified to accomadate the endogenous European policy response; and two, testing the joint hypothesis of ‘new’ European concerns and of induced contraction ...

The US Trade and Budget Deficits in Global Perspective: An Essay in Geopolitical-Economy

The disturbances in the global economy induced by the US trade and budget deficits are widely recognised by economists, even if the precise causes and effects of these deficits remain a topic of debate, What is less widely understood is that the deficits are pregnant with geographical implications for the world economy and that the production of the deficits can be explained in part by the changing and asymmetrical location of the USA in international economic and geopolitical relations. In this paper, both of these points are expanded. In section 2, competing accounts of the production of the US trade and budget deficits are considered. Particular attention is paid to ‘Reaganomics’ as an economic and geopolitical discourse. In section 3, the implications of the twin deficits for the US space-economy are considered. The regional impacts of increased military (and other) spending under Reagan are noted, as are the likely effects of the alienation of US real assets and of the buildup of debt-servicing obligations for future generations. In section 4, the implications of the US deficits for the rest of the world, and for the less developed countries in particular, are examined. Attention is drawn to the emerging links between the geography of international trade and the geography of international debt. The regional implications of a debtors' surplus are discussed in section 5, which serves also as a conclusion.

Energy management-overhauling weapons production

The reduction and reconfiguration of the US Department of Energy's (DOE) nuclear weapons production complex in the face of major safety problems and the end of the cold war are examined. The safety problems have essentially transformed the department from a weapons producer to an environmental agency with a clean-up budget of US $4 billion this year. The problems, which concern the four defense production reactors, are discussed, and some reactor incidents are described. The steps being taken to deal with the situation are described, and possible effects on DOE management are considered.< <ETX xmlns:mml="http://www.w3.org/1998/Math/MathML" xmlns:xlink="http://www.w3.org/1999/xlink">&gt;</ETX>

Science defeats all odds in US budget

Science defeats all odds in US budget

Strong support for science in US budget

Strong support for science in US budget

Space station the victim of US budget difficulties

Space station the victim of US budget difficulties

The US Budget Deficit in Perspective

Is the budget deficit the major problem facing the new administration? Giles Keating of Credit Suisse First Boston in London, argues that the size and significance of the Federal budget deficit is greatly exaggerated.

The Crash and Ricardo: Does the US Budget Deficit Matter?

How important was the American budget deficit as a cause of the crash? Geoffrey Wood and Mahmoud Pradham of the City University Business School argue that the deficit was not even a contributory cause. A modern version of the‘Ricardian Equivalence Theorem’suggests that the effect of government borrowing on the economy can be greatly exaggerated.

US budget: Winners and losers worry about Gramm—Rudman

US budget: Winners and losers worry about Gramm—Rudman

Will Politics Always Triumph?

Lord (Joel) Barnett contrasts David Stockman's experience of running the US Budget with his own of pressures inside the UK treasury as Labour Chief Secretary to the Treasury from 1974 to 1979. He concludes that a democratic system of goverment contains a built‐in check to the implementation of proposals for radical reform.

US budget: Biosciences lose out to defence

US budget: Biosciences lose out to defence

US Social Security Under Low Fertility

Focusing on existing social security programs in the US this article discusses ways to minimize their negative societal impacts and to cope with emerging below replacement fertility. Inasmuch as the very survival of social security systems depends on the levels of reproduction this article considers probable adjustments of social security under conditions of below-replacement fertility. Social security systems create distortions in the labor supply and savings rate that reduce the potential size of a countrys gross national product. Faced with this plus other taxes on income to support various government programs the worker perceives his diminished discretionary after-tax income as inadequate to support a family; hence more wives enter the labor force resulting in even lower birth rates. As the retirement age and birth rate fall there are fewer workers to support older nonworkers. As a result taxes are usually increased. Benefit growth is rarely restrained. Currently over 20% of the US budget pays for social security benefits. The US Old-Age and Survivors Insurance (OASI) can provide 1 to several benefits per worker taxed. The social security systems actuaries in making their 75-year demographic projections may be underestimating future life expectancy and overestimating the future total fertility rate of women in the US. If their demographic assumptions are wrong either the taxes will have to be increasd further or the level of benefits constrained or both. The sensitivity of the social security system to overestimates of the fertility rate is even greater than to underestimates of longevity at old ages. Immigration may partially offset the low birth rates of US natives. Despite the way it favors nonworking and divorced women the US social security system has not offset the secular trend of increasing female employment. The US government must now decide 1) whether to attempt to influence the birth rate by changing the economic balance between the rewards for having and not having a child and 2) whether to reduce the current transfer of income from young to old.

Do public budget deficits crowd out private capital expenditures?

Those economists who expected the increasing US budget deficits in recent years to have a negative impact on private investment spending have so far been proved wrong. Hans-Peter Frohlich provides an analysis of what has happened and examines the interrelation between public sector deficits and private capital expenditures.

US Budget: Basic science still to grow, but less quickly

US Budget: Basic science still to grow, but less quickly

The U.S. deficit: Whose Fault?

The US budget deficit, and the higher interest rates it is said to cause, is blamed for depressing the economies of Europe. A former Assistant Secretary to the Treasury, now Professor of Economics at Georgetown University, challenges the view that it is the result of President Reagan's tax cuts and defence build‐up. In a broadly ‘supply‐side’ analysis, he criticises Paul Volcker, Chairman of the Federal Reserve Bank, David Stockman, Director of the Office of Management and Budget, and Professor Martin Feldstein, Chairman (until June) of Council of Economic Advisors.

US budget: Military and basic science offered more rapid growth

US budget: Military and basic science offered more rapid growth

US budget: Generosity and selectivity the passwords to 1984

US budget: Generosity and selectivity the passwords to 1984

US budget described in outline

US budget described in outline

U.S. Derails Energy Plan for Third World

Reagan's budget policy has cut support for an international energy agency planned to channel $30 billion into oil-poor Third World countries. The funds would finance energy projects over a five-year period and would more than double World Bank development aid. The US representative to the World Bank called the action ill-advised for its effect on both the Bank and global economic development in his resignation statement. Conceived as a way to counteract the economic strain of high energy prices, the financial aid for energy development would also have served the self-interests of industrialized countries. The new institution would have raised money through world capital markets with the backing of loan guarantees from member governments and with recipients raising some funds of their own. The Bank hoped that some of the capital would come from Organization of Petroleum Exporting Countries (OPEC) members in order to recycle the capital surpluses of oil-producing countries. The US budget cut accompanies a review of US participation in multilateral agencies and a shift toward bilateral aid and private-industry involvement. (DCK)

Long-Range Effects of Population Change on the US Budget

Long-Range Effects of Population Change on the US Budget