Fiscal Policy

Thinking about fiscal policy dominates my time lately. Mostly my concern is with parsing the data in such a way to make sense of the various arguments out there about the proper course for fiscal policy. Recall that I doubt that anyone is willing to reduce spending by enough to balance the budget. So if we are to see balanced budgets at some point, the timing of that is a topic for another post, it seems likely to me that tax increases will be necessary. Anyway, those policy issues will be covered another day.

Continue reading Thinking about Fiscal Matters

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At least that is the case for the healthcare obligations of most states and local areas, though Robert Pozen points out that this is likely to change soon (available here). This is something I discussed when Detroit went through bankruptcy proceedings. Pension and healthcare obligations of the city made a contribution to the bankruptcy, but only because the broader electorate allow it. If we get accurate accounting and compel elected officials to use realistic discount rates there would be a better sense of the amount of these obligations. The proposed accounting changes are a step in the right direction, requiring more transparency and better assumptions.

Continue reading There’s No Accounting For Healthcare

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The Washington Post had an excellent piece on states and how they handled their tobacco settlement dollars (available here). It is a longer article but well worth the read given that it is one of the first analyses of what states are doing with the money from this settlement. The answer for many: squandering it. I am not going to rehash all the details of the article but there are bigger issues to tackle.

Continue reading All that tobacco money up in smoke

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