What To Do About The Deficit


The Economist looks at the politics and economics of reducing the deficit:

Historically, politicians are most likely to tackle deficits when prodded by markets. Denmark in 1982, Ireland in 1987 and Canada in 1995 all embarked on ambitious programmes after spiralling debts had driven up interest rates. In the same way, American deficit-reduction deals in 1985, 1990 and 1993 were nudged along by nervous markets. Such concerns are notably absent now. “Until the bond-market vigilantes form a posse again, it’s just too easy to ignore this issue,” says Alan Blinder, a Princeton University professor and former adviser to Bill Clinton.

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