Word: deficits
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Dates: during 1980-1989
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Specifically, insiders doubt the president's ability to bring down the $155 billion deficit--a hand-me-down from the Reagan era--without raising taxes or making massive social spending cuts, as he has promised. Even many staunch Republicans say Bush's spending plan will not be enough to keep the federal government...
While many experts say the deficit spending of the Reagan era has helped fuel a six-year recovery, those experts believe it will lead to future economic instability. Experts also say that the budget deficit has contributed to a deepening trade deficit, which threatens American industrial competitiveness abroad...
...would have been less surprised if they had paid more careful attention to changes in the U.S. and world economies. The deregulation of foreign capital markets in the late 1970s and early 1980s enabled the U.S. to go on a global borrowing binge that counteracted the effects of the deficit...
That concern is echoed by resurgent Keynesian economists, who are trying to adapt their mostly liberal views to current conditions. Virtually counted out when inflation surged along with unemployment in the 1970s, the Keynesians now point out that Reagan borrowed from their philosophy in propelling his economic boom with deficit spending, which Keynesians have long advocated as a cure for slumps. "Keynesianism was vindicated by these last eight years," says Princeton economist Alan Blinder, a leading exponent of the school of thought. Blinder insists, however, that the deficits have got far out of hand...
While economists may be more open to peaceful coexistence, they still tend to form battle lines over the importance of the budget deficits. Some economists contend that the deficit is no longer a menace because it has shrunk from more than 6% of the gross national product in 1983 to about 3% right now. That is lower than the level of deficit spending during 1975-76, for example, when the gap was widened by a recession. Friedman says he accepts the deficit because it has restrained federal spending. "Sometimes you have to choose the lesser of two evils," he says...