October 2, 2014

An Incomplete Economic Report

The administration recently issued the new Economic Report of the President that unfortunately avoids getting into the “tough choices” facing the nation on tax and spending policy.

Another disappointment: While focusing on a “Foundations of Growth” theme, it leaves out an important explanation of how large, persistent deficits can harm economic growth by reducing national saving.

Many of the administration’s ideas for new spending and tax cuts to encourage certain investments in our economy would have benefits. But they would be deficit-financed, and it is often unclear whether those benefits would outweigh the ultimate cost in terms of additional debt and interest payments.

A far better approach would be to pay for good proposals by reducing less productive types of federal spending and tax cuts.