Washington Does Not Get It
It’s Hard To Take The Fiscal Hawks Seriously: Testimony To The Senate Budget Committee
Posted: 05 Aug 2010 07:16 AM PDT
By Simon Johnson
Most of the discussion of federal budget issues today is misdirected. The shorter run issues are dominated by the likelihood of another financial crisis – and the implications that would have for the budget deficit – but no “fiscal hawks” even want to acknowledge the issue. It is very hard to take anyone seriously if they refuse to look at these (uncontroversial) numbers. Medium term, we obviously need tax reform. The good news, in a sense, is that the US has an antiquated and inefficient tax system; it would not be hard to improve how this operates, raising revenue and actually reducing distortion.