The Economic Benefits of Spending Restraint

International Liberty

If Donald Trump wins the 2020 election, I don’t expect any serious effort to rein in the burden of government spending.

And if Joe Biden wins the 2002 election, I don’t expect any serious effort to rein in the burden of government spending.

At the risk of understatement, this is rather unfortunate since fiscal policy in the United States is on a very worrisome path.

Thanks to demographic changes and poorly designed entitlement programs, the federal budget – assuming it is left on autopilot – is going to consume an ever-larger share of the nation’s economic output.

And that means fewer resources for the economy’s productive sector.

In a new study from the Hoover Institution, Professor John F. Cogan, Daniel L. Heil, and Professor John B. Taylor investigate the potential consequences of bigger government – and the potential benefits of spending restraint.

In this paper we consider an…

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