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Who’s Afraid of Budget Deficits?
Article

Who’s Afraid of Budget Deficits?

How Washington Should End Its Debt Obsession

Jason Furman and Lawrence H. Summers
Foreign Affairs, 2019
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Editorial Rating

8

Qualities

  • Analytical
  • Eye Opening
  • Overview

Recommendation

The US budget deficit is approaching $1 trillion. Some view this milestone as ominous, while others see little to fret about, thanks to cheap credit, the ready availability of buyers for US Treasury securities and low inflation. But a preoccupation with cutting expenditures to rein in government overlooks the fact that the real driver of the deficit is a steep drop in revenue due to tax cuts. So say economists Jason Furman and Lawrence H. Summers in this concise but worthwhile treatment of a well-worn topic, which will appeal primarily to policy experts and analysts.

Take-Aways

  • The national debt of the United States is enormous, at 78% of GDP, and estimates call for it to exceed 100% by 2029.
  • In some quarters, America’s ballooning deficit is a scourge, while others see no cause for alarm.
  • The popular notion is that increased state spending on social welfare programs has swollen the deficit, but reduced revenue due to lower taxes is really to blame for budget shortfalls. 

About the Authors

Former Treasury Secretary Lawrence H. Summers is a professor and president emeritus of Harvard University. Jason Furman is a professor at the Harvard Kennedy School of Government.

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