The U.S. Economy the new normal and an unsustainable future

Benjamin Powell, Taylor Leland Smith

Research output: Contribution to journalReview articlepeer-review

Abstract

The U.S. welfare state is rushing toward a fiscal crisis. Without a dramatic cut in government spending or a steep increase in taxes, the nation's massive indebtedness will spark a fiscal crisis likely to force citizens and politicians to reassess the government's role in the economy and to consider free-market, civil-society-based alternatives. Even splitting the burden and increasing taxes as a percentage of GDP by 5.25 percent would require the political support that was achieved only during World War II for a brief time period. It seems highly unlikely, at least absent a crisis occurring, that the American voters will support a tax increase of anything close to the magnitude necessary to stave off a fiscal collapse. If such a fiscal crisis comes about, it is expected that it will lead to a reassessment of the role government plays in the economy, a reassessment that would make the type of reductions in the size and scope of government that are not politically possible today.

Original languageEnglish
Pages (from-to)369-375
Number of pages7
JournalIndependent Review
Volume20
Issue number3
StatePublished - Dec 1 2016

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