Comments on: CBO Looks Over the Cliff

By: Jared Bernstein

Jared Bernstein — Fri, 25 May 2012 13:43:05 +0000

No, gov’t's are not like HH’s–not even close…I’ve got many posts on this, particularly on the very unfortunate analogy of belt tightening.

By: AJS

AJS — Fri, 25 May 2012 11:56:10 +0000

Hi Jared

We often hear politicians (e.g. in UK and US) talking about the government as if it is a household, as if ‘there is no money left’. But this just does not seem to make sense for the countries that are issuers of their own currency. I realise they play a game with the fed.

Surely the key is to watch out for inflation and unemployment – the rest is about distribution in order to encourage real wealth creation (say investing in education etc.)

So – is a government like a household, i.e. can it run out of money?

many thanks
Alex

By: Christopher C.

Christopher C. — Wed, 23 May 2012 20:27:19 +0000

It seems to me another good solution, which I haven’t heard mentioned, is to mitigate the effects of the cliff from the full set of tax deductions expiring by taking a good chunk of the revenue generated and turning it into targeted fiscal stimulus – aid to states, infrastructure projects, etc.

Is $1 spent well as stimulus worth more to GDP than having that $1 stay in my paycheck?