Unsolicited Advice for the Obama Administration

Posted: 16 May 2009

See all articles by Robert H. Frank

Robert H. Frank

Cornell University - Department of Economics

Date Written: May 19, 2009

Abstract

Current handwringing about projected federal deficits is overblown. Unlike the deficits of 2001-2008, which were used largely to pay for consumption, much of the projected borrowing will pay for long- neglected infrastructure investments with high rates of return. If the alternative were to forgo those investments, our children and grandchildren would actually be richer, not poorer, if we made them with borrowed money. But they'd be much richer still in the long run if we paid for the investments with our own money. There’s actually a relatively simple and painless way to do that. Once the economy has again reached full employment, we should adopt a new tax system focused on behaviors that cause injury to others. Because taxing such behaviors curtails waste, it creates new revenue essentially out of thin air.

Suggested Citation

Frank, Robert, Unsolicited Advice for the Obama Administration (May 19, 2009). Gruter Institute Squaw Valley Conference 2009: Law, Behavior & the Brain, Available at SSRN: https://ssrn.com/abstract=1405310

Robert Frank (Contact Author)

Cornell University - Department of Economics ( email )

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