Flirting with Default: Issues Raised by Debt Confrontations in the United States

The willful fiscal crackup of the last two years is going to cost the United States, dearly, unless our politicians' behavior markedly improves. For decades, Americans could count on good fiscal governance--especially compared with the rest of the world. Even if the US federal government ran de...

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Bibliographic Details
Published in:Policy File 2014
Main Authors: Gagnon, , Joseph E, Gelpern, Anna, Hellebrandt, Tomas, Posen, Adam S, Bediker, Douglas A, Stockton, David J, Troutman, Kent, Ubide, Angel
Format: Report
Language:English
Subjects:
Budgets/Expenditures
Economic policy
Peterson Institute for International Economics
Online Access:Request full text
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Summary:The willful fiscal crackup of the last two years is going to cost the United States, dearly, unless our politicians' behavior markedly improves. For decades, Americans could count on good fiscal governance--especially compared with the rest of the world. Even if the US federal government ran deficits, or put off some harder long-term choices, our basic budgetary processes worked unlike those of so-called banana republics. As a result, everyone worldwide, whether a VA patient in Louisville or a US Treasury bondholder in London, could count on the US government making its payments. Being able to take that fact for granted meant the US economy had lower interest rates and greater stability than anywhere else. That in turn meant the dollar was everyone's envy and safe haven, which brought more investment into our secure economy.