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Discussion: (4 comments)

  1. Except for the nineties I reckon!

    1. I reckon indeed…
      Actually, largely via the post-Cold War ‘peace dividend’ that allowed a gradual dismantling of the military and the 1995 Republican takeover of the House, the government did cut spending in the 1990s. And you’ll also see that big increases in federal government receipts occurred only AFTER the substantial 1997 capital gains tax cut from 28% to 20% – allowing Clinton’s claim to have turned deficits into surpluses.

  2. marmico

    Reply from Alberto Alesina
    Submitted by voxeditor on Tue, 04/17/2012 – 06:32.

    Reply from Alberto Alesina and Francesco Giavazzi
    Thank you for your insightful comment. Our piece was directed to European countries. To what extent it apples identically to the non European countries (with a smaller governments) which you mention remains to be seen top some extent, although results along similar lines may apply, in some but not all cases . Yes cutting transfers, bloated public employment and subsides is more likelyy to be beneficial than cutting public infrastructures but lack of physical infrastructures is certainly not one of the main European problems at the moment.

    And where was the U.S. mentioned, Jimmy P.?

  3. When Rattner says $3.5T will be cut, that is off a baseline that assumes spending will double in the next 20 years. That is an irrational way to look at it, yet sadly common for this subject.

    Even after adjusting for inflation and population, spending is increasing in the future in virtually all scenarios. The amount of misinformation like Rattner’s post is nauseating.

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