Cover image for Deficit hysteria : a common sense look at America's rush to balance the budget
Deficit hysteria : a common sense look at America's rush to balance the budget
Benavie, Arthur.
Personal Author:
Publication Information:
Westport, Conn. : Praeger, 1998.
Physical Description:
x, 149 pages : illustrations ; 25 cm
Reading Level:
1380 Lexile.
Format :


Call Number
Material Type
Home Location
Item Holds
HJ2051 .B46 1998 Adult Non-Fiction Non-Fiction Area

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The political consensus in the United States today is that the nation avoid deficit spending. But as virtuous and unassailable as that goal sounds, it has fallacies and dangers. In a lucid, nontechnical writing style, Benavie shows that deficits can be either good or bad and explains how to tell the difference. Deficits, or government borrowing, can be beneficial or harmful depending on what the government does with the money. Preventing such borrowing, Benavie points out, would be comparable to preventing one's family from borrowing money to buy a house or to put a child through college.

Deficits can be beneficial to the nation's economic health in three main ways. When the economy slumps, a deficit, which is automatically created, helps to reduce the severity of the recession. When the economy is seriously depressed, boosting the deficit may be the only cure. Finally, deficits to support such investments as basic research, cleaning up toxic waste, and rebuilding inner cities are crucial to the economic health of future generations.

Author Notes

ARTHUR BENAVIE is Professor of Economics at the University of North Carolina at Chapel Hill./e His specialty is macroeconomics, a field which includes the topic of government deficits. He has published numerous journal articles and two books for economists.

Reviews 1

Choice Review

Benavie (Univ. of North Carolina) has written a direct, clear, and levelheaded analysis of the macroeconomics of federal budget deficits. His principal points are that deficits are not always bad (under certain circumstances, deficits may have considerable macroeconomic advantage) and that how government revenues are spent is considerably more important than the deficit. Indeed, he argues that deficit concerns have caused real damage by constraining productive federal government expenditure, and he properly minimizes these concerns. He accepts the golden rule of government finance--that borrowing for current expenditures is not appropriate, while borrowing for long-life asset purchase can be advantageous and supports a separate federal capital budget to facilitate the division. Benavie does not intend to break new ground but rather to present sound economic logic for intelligent general readers, explaining why mainstream macroeconomists have not been hugely worried about balanced federal budgets, and he succeeds. Economists specializing in government finance and budgeting, however, worry about the consequences and implications of perpetual federal deficit (even with the recent federal budget surplus), of a separate federal capital budget, and of the health of the Social Security system. Recommended for undergraduate students and general readers. J. L. Mikesell; Indiana University-Bloomington

Table of Contents

The Deficit: A Symbol of Evil in American Politics Jobs, Inflation, and the Deficit
The Deficit and Our Future Standard of Living
The Rich, the Poor, and the Deficit
The Baby Boomers and the Future Deficit Social Security, Medicare, and the Deficit
How Do European Countries Do It? Goal '95: A Balanced Budget by 2002
Deficit Myths: What's True, What's False?
Questions and Answers