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Fifteen Causes and Consequences of the Deficit

1. Charles P. Alexander, "That Monster Deficit," Time, March 5, 1984, p. 60. [BACK]

2. Congressional Budget Office, "Reducing the Deficit: Spending and Revenue Options," A Report to the Senate and House Committees on the Budget—Part III, February 1983, p. 1. [BACK]

3. Congressional Budget Office, "The Economic and Budget Outlook: Fiscal Years 1986-1990," A Report to the Senate and House Committees on the Budget—Part I (Washington, D.C.: U.S. Government Printing Office, February 1985), p. 162. [BACK]

4. Gregory B. Mills and John L. Palmer, The Deficit Dilemma (Washington, D.C.: Urban Institute, 1983), pp. 8-10, give a short summary of the tax increases. [BACK]

5. For extensive discussion of entitlements, see Jack A. Meyer, "Budget Cuts in the Reagan Administration: A Question of Fairness," in D. Lee Bauden, ed., The Social Contract Revisited (Washington, D.C.: Urban Institute, 1984), pp. 33-64. [BACK]

6. See Congressional Budget Office, "Reducing the Deficit," pp. 98-99. [BACK]

7. See Congressional Budget Office, "The Economic and Budget Outlook," p. 153. [BACK]

8. Peter W. Bernstein, "David Stockman: No More Big Budget Cuts," Fortune, February 6, 1984, pp. 53-56. [BACK]

9. Executive Office of the President, Office of Management and Budget, Budget of the United States Government Fiscal Year 1984 (Washington, D.C.: U.S. Government Printing Office, 1983), pp. 3-9. [BACK]

10. U.S. Congress. House. Committee on Ways and Means. Background Material and Data on Program Within the Jurisdiction of the Committee on Ways and Means. 99th Cong., 1st sess., February 22, 1985, pp. 55-56. Committee Print. [BACK]

11. Martha Derthick, Policymaking for Social Security (Washington, D.C.: Brookings Institution, 1979), p. 357. [BACK]

12. The term is Frank Levy's. See his Dollars and Dreams: The Changing American Income Distribution (New York: Russell Sage Foundation, 1987). [BACK]

13. Congressional Budget Office, "The Economic and Budget Outlook," p. 162. [BACK]

14. Office of Management and Budget, Budget of the U.S. Government, pp. 14-16. [BACK]

15. Ibid. [BACK]

16. Stockman, Triumph of Politics, p. 399. [BACK]

17. Ibid. [BACK]

18. Table from Mills and Palmer, Deficit Dilemma, p. 22. Any particular snap shot will provide a slightly different picture, due to changes in experienced and projected economic performance and in congressional action. But this table is close enough to others for our purposes. For comparison, the 1985 CBO Appendix D and its baseline, including indexing of tax rates in 1981, is particularly reasonable. Blaming Reagan for deficits "caused" by not allowing taxes to rise above the level which helped defeat Jimmy Carter seems unreasonable. [BACK]

19. See Levy, Dollars and Dreams, for a splendid analysis on how demography affects outcomes. [BACK]

20. Charles P. Alexander, "The Elusive Recovery," Time, December 27, 1982, pp. 60-62. [BACK]

21. "A Slow-Motion Recovery May Speed Up Toward Year End," Business Week, December 27, 1982, pp. 54-57. [BACK]

22. Office of Management and Budget, Budget of the U.S. Government, pp. 2-9. [BACK]

23. Stephen B. Shepard, Robert E. Farrell, and Lee Walczak, "Interview with President Reagan," Business Week, February 14, 1983, p. 119. [BACK]

24. Melinda Beck et al., "Playing Politics with Jobs," Newsweek, February 14, 1983, p. 20. [BACK]

25. Charles P. Alexander, "Here Comes the Recovery," Time, February 28, 1983, pp. 42-44. [BACK]

26. Harry Anderson et al., "A Forecast of Sunshine," Newsweek, July 4, 1983, p. 40. [BACK]

27. Charles P. Alexander, "Showing Some Real Muscle," Time, July 4, 1983, pp. 40-41. [BACK]

28. George J. Church, "Going Back to Work," Time, August 15, 1983, p. 12. [BACK]

29. Council of Economic Advisers, Economic Report of the President 1985 (Washington, D.C.: U.S. Government Printing Office, 1985), pp. 266-67. [BACK]

30. Ibid., p. 269. [BACK]

31. Ibid., p. 277. [BACK]

32. Ibid., pp. 328-29. [BACK]

33. Ibid., pp. 258-59. [BACK]

34. U.S. Congress. House. Committee on the Budget. A Review of President Reagan's Budget Recommendations, 1981-85. 98th Cong., 2d sess., August 2, 1984, pp. 37-41. Committee Print. [BACK]

35. Council of Economic Advisers, Economic Report of the President, pp. 32-33. [BACK]

36. Ibid., p. 35. [BACK]

37. See Kim Foltz et al., "Economic Theory in Reverse," Newsweek, July 16, 1984, pp. 47-48. [BACK]

38. House Budget Committee, Review of President Reagan's Budget Recommendations, p. 13. [BACK]

39. Greider's Secrets of the Temple tells the story of Fed policy. A good indicator of Fed policy is its purchases of federal debt. The Fed increased its holding by more than 20 percent from June 1982 through September 1983. Over the next year its holdings didn't grow at all. [BACK]

40. John Greenwald, "Topic A in the Money World," Time, April 25, 1983, pp. 96-97. [BACK]

41. Harry Anderson et al., "Voting for Volcker to Stay," Newsweek, June 20, 1983, pp. 53-54. [BACK]

42. Greenwald, "Topic A in the Money World"; John S. DeMott, "Down to the Finish Line," Time, June 21, 1983, pp. 58-59; Maureen Dowd, "Chairman Volcker Keeps His Job," Time, June 27, 1983, pp. 16, 19; Anderson, "Voting for Volcker to Stay"; Harry Anderson et al., "Volcker: Man for the Moment," Newsweek, June 27, 1983, pp. 66-68. [BACK]

43. Walter Isaacson, "Untamed Monster," Time, May 23, 1983, pp. 14-15. [BACK]

44. Richard I. Kirkland, Jr., "The Reaganites' Civil War Over Deficits," Fortune, October 17, 1983, pp. 74-80. [BACK]

45. Ibid., p. 74. [BACK]

46. Alexander L. Taylor III, "The Administration's Dr. Gloom," Time, November 7, 1983, p. 78. [BACK]

47. Barry Bosworth, "Statement Before the Joint Economic Committee, United States Congress," September 17, 1985, typescript, p. 5. [BACK]

48. Walter W. Heller and George L. Perry, "U.S. Economic Policy and Outlook," National City Bank of Minneapolis report, October 18, 1985, typescript. [BACK]

49. Greider, Secrets of the Temple; and Thomas B. Edsall, The New Politics of Inequality (New York: W. W. Norton, 1984) are good examples of the critique. [BACK]

50. Joseph Schumpeter, Capitalism, Socialism, and Democracy (London: Allen & Unwin, 1976). [BACK]

51. "Grumbling About Deficits," Time, August 15, 1983, p. 13; and Charles P. Alexander, "Surging Up from the Depths," Time, September 26, 1983, pp. 50-51. [BACK]

52. Harry Anderson et al., "Congress: Ducking the Deficits," Newsweek, September 26, 1983, pp. 19, 77. [BACK]

53. Alexander L. Taylor III, "Labor gets a working over," Time, December 19, 1983, pp. 48-49. [BACK]

54. Congressional Budget Office, "The Economic Outlook," A Report to the Senate and House Committees on the Budget, Part 1 (Washington, D.C.: U.S. Government Printing Office, February 1984), p. xxii. [BACK]

55. Stein, Presidential Economics, p. 290. [BACK]

56. The validity of this analysis depends on the volume of private saving and the extent to which the government itself is performing constructive investment. Thus, cross-national comparisons, e.g., to Japan, might seem to invalidate the argument but do not. Within a given economy, a shift to higher deficits should favor consumption over investment. [BACK]

57. Savage, Balanced Budgets. [BACK]


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