The United States has a large budget deficit and a ratio of debt to gross domestic product that, in most projections, continues to rise over time. Some House and Senate Republicans are arguing strongly that this situation calls for big, immediate cuts in government spending — for example, as part of any agreement to increase the federal government’s debt ceiling. The Joint Economic Committee of Congress held a hearing on Tuesday to discuss whether such spending cuts would be contractionary or expansionary for the economy in the short run. After taking part as a witness at the hearing, I conclude that large immediate spending cuts would tend to slow the economy.
Money
Source: The New York Times
