Law Commons^™

Good Deficits: Protecting The Public Interest From Deficit Hysteria, Neil H. Buchanan

Neil H. Buchanan

President Obama has come under increasingly fierce criticism for the size of the federal budget deficit, as both Democratic and Republican politicians loudly proclaim that federal spending should be cut. This article explains why such anti-deficit fervor is misguided and simplistic, and why, perhaps counter-intuitively, cutting government spending can hurt the country, rather than help it, in both the short run and the long run.

In the short run, cutting deficit spending can be disastrous to the economy, especially if the economy is already in decline. In addition, because the federal budget fails to separate spending that provides long-term benefits …

Medicare Meets Mephistopheles: Health Care, Government Spending, And Economic Prosperity, Neil H. Buchanan

Neil H. Buchanan

This essay is an edited version of my remarks during the first panel of the Mississippi College Law Review’s symposium on health care reform, which was held on February 26, 2010, in Jackson, Mississippi. The essay integrates my prepared comments with my responses to comments and questions during the discussion period. I have also added some further thoughts on several of the issues that are relevant to the subject matter, especially in light of the subsequent passage of a major federal health reform bill.

These remarks are necessarily brief, and they therefore can include only a hint of the issues …

The ‘Growth Budget’: Disciplined And Responsible Government Spending For Future Prosperity, Neil H. Buchanan

Neil H. Buchanan

This essay considers how spending by the federal government can improve long-term living standards. The familiar concept of “capital budgeting” separates government expenditures into two categories: purchases of goods and services for current consumption that provide no long-term payoff (“operating expenditures”), and purchases of productive capital goods that do generate long-term payoffs (“capital expenditures”). Within that framework, I advocate expanding the range of possible public investments that would count as capital expenditures to include those that do not produce physical infrastructure but that nevertheless provide long-term economic benefits. Adding these items – such as spending on basic research, health care, …

'Generational Theft'? Even With Stimulus And Bailout Spending, U.S. Fiscal Policy Does Not Cheat Future Generations, Neil H. Buchanan

Neil H. Buchanan

Despite the oft-heard claims that current generations are stealing from future generations by running fiscal deficits, both theory and evidence suggest that this is either not true or not knowable. Intergenerational justice is not an appropriate lens through which to analyze fiscal issues, because there is no obvious starting point from which to build a moral consensus about whether current generations owe anything at all to future generations - and even if we do believe that we owe something to future generations, no one has offered a useful method by which we can determine whether we are doing enough for …

What Do We Owe Future Generations?, Neil H. Buchanan

Neil H. Buchanan

In the United States, it is common for legal scholars, economists, politicians and others to claim that we are selfishly harming “our children and grandchildren” by (among many other things) running large government budget deficits. This article first asks two broad questions: (1) Do we owe future generations anything at all as a philosophical matter? and (2) If we do owe something to future generations, how should we balance their interests against our own? The short answers are “Probably” and “We really are not sure.”

Finding only general answers to these general questions, I then look specifically at U.S. fiscal …

Four Out Of Four Panelists Agree: U.S. Fiscal Policy Does Not Cheat Future Generations, Neil H. Buchanan

Neil H. Buchanan

As part of the George Washington Law Review's symposium "What Does Our Legal System Owe Future Generations? New Analyses of Intergenerational Justice for a New Century," participants discussed the nature of intergenerational obligations as they relate to fiscal policy. The panelists reached consensus that intergenerational justice is not an appropriate lens through which to analyze fiscal issues, because there is no obvious starting point from which to build a moral consensus about whether current generations owe anything at all to future generations, much less how to quantify any such obligation. In addition, even pessimistic forecasts indicate that future generations will …

How Realistic Is The Supply/Demand Equilibrium Story? A Simple Demonstration Of False Trading And Its Implications For Market Equilibrium, Neil H. Buchanan

Neil H. Buchanan

Transactions at non-equilibrium prices are false trades. Under standard assumptions, markets without false trading produce Pareto-efficient outputs. This paper demonstrates graphically the complications created when false trades occur, showing that quantities produced deviate from Pareto-efficient quantities except under unique conditions. In a general equilibrium framework, this spills over to cause Pareto-inefficient results in other markets as well. These observations call into question the use of standard supply-and-demand equilibrium theory as a starting point for policy analysis.

Is It Sometimes Good To Run Budget Deficits? If So, Should We Admit It (Out Loud)?, Neil H. Buchanan

Neil H. Buchanan

There are bad deficits and there are good deficits. What makes a fiscal deficit good or bad depends on both the context in which the deficit is run and the reason that the deficit is rising. The belief that it is unquestionably foolish to adopt policies that directly or indirectly increase the government's annual borrowing on the financial markets - which is what it means to run a budget deficit - is not the universal truth that the current conventional wisdom might imply. Budget deficits are potentially dangerous and must be monitored carefully, but they are not always, inevitably, completely, …

Taxes, Saving, And Macroeconomics, Neil H. Buchanan

Neil H. Buchanan

In response to increasing calls for policies to raise the U.S. saving rate, proposals are once again being offered in Congress to change the tax base from income to consumption. Beyond the important issues of income distribution (that is, outright unfairness) inherent in such a plan, it would simply not work. Indeed, it is based on a fundamental mismeasurement of what counts as saving in the U.S. economy. The logical sequence underlying this proposal is wrong at two crucial points: lowering or eliminating taxes on saving is unlikely to increase saving, and higher saving would be unlikely to increase investment …