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Why the budget doesn’t balance

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22.05.2017

Almost everyone has a simple cure for America’s stubborn budget deficits: faster economic growth. The Trump administration is particularly keen on this. It argues that its proposed tax reductions and regulatory cuts will accelerate economic growth and shrink the deficits. No doubt faster growth would help. But a more realistic appraisal is that, even with accelerated growth, huge gaps would remain between government spending and taxes.

As the White House presents its first full budget (segments were released earlier), this is worth emphasizing. It suggests that only unpopular tax increases and spending cuts will bring the budget close to balance. There’s no magic in faster growth. Indeed, the focus on speeding up economic growth may distract attention from the harder questions of what government should do and who should pay for it. Not just Medicaid and food stamps, but Social Security, other programs and higher taxes should also be on the table.

No one denies that U.S. economic growth lags post-World War II........

© Washington Post