The Basic Formula to Curb Deficits

The formula for curbing deficits is easy to comprehend. It consists of two action items. First, the federal government can increase revenues. Its main strategy for doing this is to increase taxes. Second, the federal government can decrease spending. There is a third policy solution, which is the combination of these two—increase taxes and decrease spending.

The formula is easy to comprehend, but not easy to implement. Why? Obviously, increasing taxes is a politically unpopular strategy. Reducing government spending may not be well received by the public, either. People do not like to see programs and services cut, particularly if it will impact them directly. Try telling your elderly next-door neighbor that ...

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