scholarly journals The Case for a New Fiscal Constitution

1992 ◽  
Vol 6 (2) ◽  
pp. 13-24 ◽  
Author(s):  
William A Niskanen
Keyword(s):  
Price Level ◽  
Federal Budget ◽  
Fiscal Rules ◽  
Budget Deficits ◽  
Voting Rules ◽  
The Public ◽  
General Price Level ◽  
Federal Debt ◽  
Fiscal Constitution ◽  
The Government

For the first 140 years of U.S. history, the federal budget was effectively constrained by two fiscal rules: the formal limits within the Constitution on the enumerated spending powers and an informal rule that the government could borrow only during recessions and wars. At the end of the 1920s, federal expenditures were 2.6 percent of GNP. The federal debt was constrained to about equal to 16 percent of GNP. The general price level was roughly stable over this long period. Over the past six decades, however, federal expenditures have increased to nearly 25 percent of GNP. Larger and more frequent budget deficits have increased the federal debt held by the public to an amount equal to about 50 percent of GNP. And the general price level is now about nine times the level at the beginning of this period. This dramatic change in fiscal and monetary conditions occurred without one amendment to the Constitution to authorize a change in the fiscal rules. Our effective fiscal constitution has been transformed into one in which Congress and the President may authorize any type or amount of expenditures and taxes, subject only to the voting rules for routine legislation. How did this happen? Should economists be concerned about this change in the fiscal constitution? What, if anything, should be done about it?

scholarly journals Federal Budget Policy with an Aging Population and Persistently Low Interest Rates

2017 ◽  
Vol 31 (3) ◽  
pp. 175-194 ◽  
Author(s):  
Douglas W. Elmendorf ◽  
Louise M. Sheiner
Keyword(s):  
Interest Rates ◽  
Federal Budget ◽  
Federal Spending ◽  
Budget Deficits ◽  
The Us ◽  
Us Government ◽  
Low Interest Rates ◽  
Budget Policy ◽  
Federal Debt ◽  
The Government

Some observers have argued that the projections for high and rising debt pose a grave threat to the country's economic future and give the government has less fiscal space to respond to recessions or other unexpected developments, so they urge significant changes in tax or spending policies to reduce federal borrowing. In stark contrast, others have noted that interest rates on long-term federal debt are extremely low and have argued that such persistently low interest rates justify additional federal borrowing and investment, at least for the short and medium term. We analyze this controversy focusing on two main issues: the aging of the US population and interest rates on US government debt. It is generally understood that these factors play an important role in the projected path of the US debt-to-GDP ratio. What is less recognized is that these changes also have implications for the appropriate level of US debt. We argue that many—though not all— of the factors that may be contributing to the historically low level of interest rates imply that both federal debt and federal investment should be substantially larger than they would be otherwise. In conclusion, although significant policy changes to reduce federal budget deficits ultimately will be needed, they do not have to be implemented right away. Instead, the focus of federal budget policy over the coming decade should be to increase federal investment while enacting changes in federal spending and taxes that will reduce deficits gradually over time.

scholarly journals Fiscal Rules, Creative Accounting and Fiscal Transparency: An Evaluation on the Transition Economies

2015 ◽  
Author(s):  
İlter Ünlükaplan ◽  
Volkan Yurdadoğ ◽  
Ebru Canıkalp
Keyword(s):  
Public Finance ◽  
Good Governance ◽  
Fiscal Rules ◽  
Accounting System ◽  
Budget Deficits ◽  
The Public ◽  
Fiscal Transparency ◽  
Government Accounting ◽  
Creative Accounting ◽  
The Relationship

An anonymous idea is observed in the public finance literature that includes where fiscal rules, i.e numerical rules on the fiscal indicators, are strict and stringent, policy executives will have incentives to recourse to creative accounting implementations to overcome these numerical limits. Creative accounting is applied for demonstrating economic, especially fiscal indicators better than the originals to reach the necessary fiscal limit, even if they are primarily conducted by private firms. Many countries applied these illusory implementations to hide their reported budget deficits especially in the last global crisis period. With this manner, creative accounting violates the basic principles of governance in public finance. In this context, governments should have to establish statistical classification structure and government accounting system that aims to prevent creative accounting. With this dimension, fiscal transparency will prevent from creative accounting implementations. In this study, the relationship between fiscal rules and creative accounting on the public finance administration level will be determined and fiscal transparency suggestions that prevent these frauds in the economies will be evaluated. As a result, the practice of good governance in public finance should be implemented to provide financial transparency. In addition, the reforms about transparency in the legislation should be consider as an important proposal.

MONEY TAXES, MARKET SEGMENTATION, AND SUNSPOT EQUILIBRIA

2001 ◽  
Vol 5 (3) ◽  
pp. 327-352
Author(s):  
Todd Keister
Keyword(s):  
Market Segmentation ◽  
Competitive Equilibrium ◽  
Price Level ◽  
Asset Market ◽  
Fiat Money ◽  
Lump Sum ◽  
General Price Level ◽  
Redistribution Policy ◽  
Sunspot Equilibria ◽  
The Government

This paper investigates how volatile the general price level can be in an equilibrium where all uncertainty is extrinsic. The government operates a lump-sum redistribution policy using fiat money. An approach to modeling asset market segmentation is introduced in which this tax policy determines how volatile the price level can be, which in turn determines the volatility of consumption. The paper characterizes (i) the set of general price levels consistent with the existence of competitive equilibrium and (ii) the resulting set of equilibrium allocations. The results demonstrate how redistribution policies that are fixed in nominal terms can have a destabilizing effect on an economy, and show how to evaluate the amount of volatility that a particular policy may induce.

Whatever Happened to the Farm Problem?

2011 ◽  
Vol 11 (4) ◽  
pp. 86-90 ◽  
Author(s):  
Jimmye S. Hillman
Keyword(s):  
Federal Budget ◽  
Thomas Jefferson ◽  
Land Policy ◽  
Market Place ◽  
Short Term ◽  
The Public ◽  
Rural Employment ◽  
The Great Depression ◽  
Banking Panics ◽  
The Government

The “farm problem” was a phrase that appeared on the scene in the 1930s after a continued inability of the market to absorb what farmers were producing. Actually, there had always been a farm problem, mostly one of overproduction, and lack of rural employment. Short-term crises were treated with short-term remedies. Banking “panics” came and went; tariff policy was a principal worry for farmers, and land policy (the public domain) had affected farmers since the time of Thomas Jefferson. It was not until the Great Depression that the federal government intervened directly in the market place to affect prices and incomes. The government also intervened in labor markets and foreign trade to benefit the farm sector. Government has never been able to extract itself. The farm problem is that too many resources being committed to agriculture, and farmers and the rural sector are unable to adjust. Ultimately, the issue became political: how much (or how little) money should be spent on agriculture, and in what way should it be spent? So long as the agricultural budget dominated the federal budget there was “war.” Today, agriculture has a smaller share of the budget but the farm problem remains. Henry Wallace, US Secretary of Agriculture under FDR, would be astounded!

scholarly journals Chile Fiscal Policy Management

2013 ◽  
Vol 16 (2) ◽  
pp. 45-62
Author(s):  
Ryszard Piasecki ◽  
Erico Wulf Betancourt
Keyword(s):  
Fiscal Policy ◽  
Public Debt ◽  
Budget Deficit ◽  
Budget Deficits ◽  
Policy Management ◽  
Total Revenue ◽  
The Public ◽  
The Government ◽  
Budget Surplus

A budget surplus arises in a country when the total revenue earnings surpass expenditures in a particular financial year. Having a budget surplus is very important in the sense that it brings about a decrease in the net public debt, while the public debt is increased in the event of a budget deficit. Both budget deficits and budget surpluses also exert indirect influences on taxpayers. Normally, it is not essential on the part of the government to maintain a budget surplus, though it needs to be very careful when running a budget deficit to have the proper buffer.  

The Socialization of Risks

1945 ◽  
Vol 7 (1) ◽  
pp. 43-57
Author(s):  
Fritz Karl Mann
Keyword(s):  
Public Sector ◽  
Social Groups ◽  
Capital Formation ◽  
Private Capital ◽  
Free Enterprise ◽  
War Economy ◽  
The Public ◽  
Federal Debt ◽  
The Government ◽  
Almost All

Transition to a war economy is, in its very essence, a shift of economic responsibilities from business to government. This shift covers almost all activities: initiative, planning, execution, coordination. Still the change in our capitalistic structure brought about by governmental leadership and numerous diversified controls should not be overstated. The new frontiers drawn between the private and the public sector do not alter the dualistic character of our economy. It is not “the opposite of free enterprise” since successful entrepreneurs are still allowed to reap the profit of their venture, restricted only by taxation and by some of its efficient supplements, particularly renegotiation of contracts and war bond drives. War profits, moreover, have been so substantial in almost all social groups that the stream of private capital-formation flows broader and deeper than it did in peace time, broader and deeper at any rate than in the public sector where the government has been burdened with an unprecedented federal debt. Broadly speaking, our economy is a hybrid with a collectivistic head and an individualistic heart.

scholarly journals Die Durchsetzung der Haushaltspolitik und der Haushaltsführung

2021 ◽  
Author(s):  
◽  
Markus Huber
Keyword(s):  
Financial Management ◽  
Legal Protection ◽  
Federal Budget ◽  
Fiscal Rules ◽  
Constitutional Court ◽  
Control Mechanisms ◽  
Budget Management ◽  
Legal Enforcement ◽  
Fiscal Rule ◽  
Federal Debt

Adopting the debt break as the highest fiscal rule for the Swiss federal budget has ended the long legalization process surrounding the federal budget management. The debt break guarantees a passive-anticyclic budget policy by allowing discretionary measures during extraordinary circumstances. Through its standards in law and regulation, it binds the financial management to a supervisory fiscal rule. Furthermore, the Swiss federal debt break served as a model for the German federal debt break. It also functions as an addition to the various cantonal fiscal rules. While the German Federal Constitutional Court is able or even obliged to check whether each and every proposal is compliant with the debt break, the Swiss equivalent lacks any possibility for legal review. The cantonal budget laws, too, lack any judicial protection. To ensure that supervisory fiscal rules are enforced, financial policy actors can choose to follow the implementation laws. Also, the implementation of such is supervised by financial control authorities and independent control mechanisms within the budget laws. These enforcement mechanisms are supported by the principles of budget management that are valid throughout the entire budget and accounting process. Comparing the enforceability of the Swiss federal budget with its cantonal equivalents as well as the German federal debt break leads to the question whether the Swiss rules are sufficiently actionable. For the Swiss federal budget, the possibilities for legal enforcement or even individual legal protection are indeed only indirect and very limited. Still, expanding legal measures for enforcing standards under the current financial legislation would be alien to the system and cannot be accomplished without additional friction between their enforcement and other financial laws and policies. In addition to simply expanding enforcement capabilities, it is worth considering and evaluating alternatives. It is especially recommended to continuously examine whether current budget laws are compatible with and suitable for achieving a medium- to long-term budget balance.

scholarly journals Une analyse de la politique fiscale du gouvernement fédéral par l’examen des soldes budgétaires

2009 ◽  
Vol 60 (2) ◽  
pp. 240-253 ◽  
Author(s):  
Serge Coulombe
Keyword(s):  
Fiscal Policy ◽  
Federal Government ◽  
Public Debt ◽  
Federal Budget ◽  
Considerable Importance ◽  
Budget Deficits ◽  
The Public ◽  
Macroeconomic Impact

ABSTRACT In this paper, we assess the current federal fiscal policy using the budget forecast of February 1984 and some macroeconomic concepts. The payments of interest on the public debt are of considerable importance in our analysis. We also give our opinion on the macroeconomic impact of a certain number of non budgetary measures included in the Federal budget of February 1984. Finally, we analyse the long term problems brought up by the budget deficits of the Federal government.

Fiscal risks are low but rising in Turkey

2016 ◽  
Keyword(s):  
Fiscal Policy ◽  
Public Debt ◽  
Global Economy ◽  
Current Account Deficit ◽  
Private Investment ◽  
Fiscal Sustainability ◽  
Budget Deficits ◽  
Content Type ◽  
The Public ◽  
The Government

Subject Turkey's fiscal sustainability. Significance By keeping fiscal deficits low, the government has steadily reduced the public debt to about 33% of GDP. However, fiscal policy is now shoring up growth. There is also concern about the lack of further public financial reform, insufficient transparency and contingent liabilities. Impacts Wider budget deficits may not affect growth notably, given the weak global economy and low private investment and investor confidence. Turkey will have one of Europe's lowest public-debt levels, but investors may need to pay more attention to public finances. Fiscal policy could join more urgent worries about politics, the current-account deficit, private-sector debt and monetary policy.

Pension plans carry high risks for France’s Macron

2019 ◽  
Keyword(s):  
Euro Area ◽  
Pension Reform ◽  
Pension Plans ◽  
Fiscal Rules ◽  
Budget Deficits ◽  
Content Type ◽  
Pension Schemes ◽  
Retirement Security ◽  
The Government ◽  
The Military

Subject Pension reform in France. Significance President Emmanuel Macron’s pension reform plans are designed to combat budget deficits and create more flexibility for people changing jobs. Concerns that future retirees will have reduced pension rights have resulted in strikes and protests throughout France. However, the government remains committed to implementing the reforms. Impacts Spending priorities such as the military and police may suffer if the government is forced to make expensive concessions on pensions. Additional private pension schemes could become more popular as households seek to bolster their retirement security. Budget overruns resulting from the failure to implement reforms would risk compromising euro-area fiscal rules.

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