America’s Fiscal Policy Is Not in Crisis

The angst of some US politicians would suggest the country is in terrible economic shape, close to bankruptcy and the inability to pay on its obligations. The view is false, contends Martin Wolf of the Financial Times. The US does have fiscal challenges, he maintains, largely due to its inefficient healthcare system and the inability to say no to special interests. The country is on the path for stabilizing debt over the next decade, but long-term prospects will require increased revenues from higher taxes or other sources as well as reducing health-care costs. “In practice, political equilibrium tends to include the commitments to spending, but not the parallel commitments to revenue,” Wolf writes. “In the long run, adjustments must be made.” Wolf warns of the dangers of too much and too fast tightening – and kicking an economy when it’s already down and hurting. Promoting economic recovery is a priority over reducing taxes or spending. – YaleGlobal