U.S. Debt and Deficits: Time to Reverse the Trend
Milken Institute White Paper, November 2011
12 Pages Posted: 30 Nov 2011 Last revised: 22 May 2012
Date Written: May 2012
With the failure of the Congressional "supercommittee," national attention is once more focused on the issue of ever-mounting federal budget deficits. This paper provides a primer on budget deficits, and surpluses from the creation of the federal government. From 1790 to 2010, government spending averaged 8.7 percent of GDP; today it is 25 percent, fueling debt of historic levels. The only meaningful solution to reducing debt levels, the authors argue, is to cut entitlement programs, and then set a tax rate sufficient over the course of the business cycle to fund government spending.
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