Word: deficits
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Dates: during 1970-1979
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From the White House point of view, the budget's key accomplishment was lowering the projected deficit to $29 billion. With the economy now in the fourth year of recovery and expansion, there really should be no deficit at all; but attempting to slow the flow of red ink is a move in the right direction. For that, Budget Director James Mclntyre deserves much credit. Unlike years past, when Carter involved himself deeply in the budget-drafting process and reviewed the document virtually line by line, this year he left the task largely to Mclntyre. The budget boss mainly...
...businessmen will be willing to buy and build only when they see that inflation has been curbed. They believe, with much justification, that Government spending is one of the root sources of the inflationary spiral that hurts all Americans. For both psychological and substantive reasons, narrowing the deficit and bringing the budget into balance are vital steps in slowing the rise in prices. During the '60s and early '70s, the budget exploded with a mass of social programs that were perhaps innovative and needed at that time, but the mood and economy of the country have changed...
That is one of the most durable and emotional questions in American political debate. As inflation has soared close to double-digit rates, with no war or speculative boom or oil shortage to blame it on, deficit spending has come to be viewed as the fiscal mortal sin leading inexorably to inflationary damnation. The legislatures of 22 states have called for a constitutional amendment that would require a balanced budget every year. Amendment or not, that would be impossible, since no Administration could predict future revenues and expenditures accurately enough. It is also undesirable. There are circumstances in which...
...does one judge whether-and how big-a deficit is appropriate? There is no simple answer, because deficits can have a variety of effects on the economy. As Arthur Burns, former Federal Reserve Board chairman, notes: "When the Government runs a budget deficit, it pumps more money into the pocketbooks of people than it takes out of their pocketbooks." That creates more demand for goods and services, which can put idle people and machines to work, or can make prices rise faster than they would if demand were lower...
...often, alas, a deficit does both, and economists divide diametrically on which effect has predominated lately. Says Liberal Arthur Okun: "The role of the deficit in the inflation of recent years has been trivial. The only way that a deficit creates inflation is by overheating the economy, and we haven't had an overheated economy in five years." The opposing view, from Burns: "This persistence of substantial deficits in federal finances is mainly responsible for the serious inflation that got under way in our country in the mid-'60s ... and when the deficit increases at a time...