As the U.S. debt and deficit grows, some politicians and economists have called for higher tax rates in order to balance the budget. The question becomes: when the government raises taxes, does it actually collect a larger portion of the US economy? Professor Antony Davies examines 50 years of economic data and finds that regardless […]
In 2011, the federal government received $2.2 trillion from all revenue sources and spent 3.8 trillion, resulting in a $1.6 trillion deficit. To put federal government spending in perspective, economics professor Antony Davies shows how long it takes the government to run out of money and how much the government needs to cut to make […]
The U.S. federal government collected $2.2 trillion in 2011. This includes revenue from all sources. Also in 2011, the federal government spent $3.8 trillion and was $14.6 trillion in debt. These numbers are too big to comprehend, so economics professor Antony Davies presents the government’s fiscal situation scaled down to the level of an average […]
The United States currently pays 3 percent interest on the government debt. Economics professor Antony Davies shows that this year the U.S. government owes $440 billion in interest alone. This is three times the annual operating expenses of the Iraq and Afghanistan wars. Using data, Professor Davies shows that the situation is likely to get […]
Do governments ever cut spending? According to Dr. Stephen Davies, there are historical examples of government spending cuts in Canada, New Zealand, Sweden, and America. In these cases, despite popular belief, the government spending cuts did not cause economic stagnation. In fact, the spending cuts often accelerated economic growth by freeing up resources for the […]
Nations that spend themselves into debt face very difficult choices. As Dr. Stephen Davies sees it, a country in debt has three potential options to fix their debt problem. The first option is some combination of raising taxes and cutting spending. The second is to repudiate on the debt. The third option is inflation. Among […]
Investment capital is scarce, which necessarily implies that there is a trade-off between government bonds and other types of economic activity. Put another way, investing $1.00 in government debt ensures that the same $1.00 will not be used for private investment or goods and services. According to historian Stephen Davies, government spending will almost always […]
Dr. Jeffrey Miron at Harvard explains America’s debt situation, which is projected to worsen in the coming years. In his estimation, an increase in taxes will only make the situation worse, as it will reduce productivity. Therefore, government spending must be cut. If not, America will be bankrupt and default on its debt.
Peter Ferrara argues that Social Security benefits yield a lower rate of return than a typical blend of stocks and bonds. On top of this, it is highly unlikely that Social Security will be able pay all the benefits it has promised. Personal accounts, he argues, are the best alternative to the current Social Security […]
Prof. Antony Davies analyzes Social Security in the United States through the lens of a typical 22 year old American. Assuming that Social Security is completely solvent, the expected return on investment (ROI) of Social Security is far lower than the expected ROI of a private account. Further, if an individual could hypothetically opt out […]
What is the single most important thing that can be done to fix the U.S. budget deficit? Harvard economist Jeff Miron says the answer is clear: cut entitlements. Miron explains that as currently structured, the costs of Medicare, Medicaid, and Social Security will continue to grow rapidly, eclipsing all other U.S. spending in the next […]
Is Social Security bankrupt? According to Prof. Anthony Davies, it isn’t bankrupt yet, but it will be soon. Davies warns that as a simple matter of mathematics, the current system is unsustainable. To see the timeline in greater detail, visit: http://www.antolin-davies.com/conventionalwisdom/isssbankrupt.pdf
Economist Jeffrey Miron of Harvard University outlines three policy reforms that he thinks would promote economic recovery and growth in the United States: cutting entitlements, freezing regulation, and replacing the existing tax code with a flat tax on consumption.
Economics professor Antony Davies illustrates the size the U.S. federal government’s debt and unfunded obligations. He breaks down U.S. debt and obligations into constituent parts and compares them with the size of the GDP of countries around the world, showing the magnitude of America’s fiscal situation. For more details on the total federal debt, start […]