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As a result, tax cuts in response to a slowdown have typically arrived too late, fuelling the next boom rather than cushioning the impact of a recession.During the 1970s and 1980s, not only did fiscal fine-tuning fail, but budget deficits rose alarmingly.
As deficits rose during the 1950s, the Old Bay Line began cutting back.
It is hardly surprising, then, that state and local budget deficits rose from an annual rate of $205.2 billion in the fourth quarter of 2007 to $377 billion by the middle of 2009, an 83.9percentt increase that brought deficits up from 9.4percentt of total expenditures to 16percentt.
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So banks face bankruptcy and government deficits rise.
Mr. Bush's proposals would "send us back down the drain of deficits, rising interest rates and rising unemployment," Mr. Lieberman said.
"With winter approaching the NHS faces a toxic mix of financial deficits, rising waiting times and low morale.
But if those cuts were part of a long-term strategy for reducing deficits, rising confidence in America's economic future might in turn increase business investment now.
With the U.S. economy facing a recession and federal and household deficits rising, postal reform is all the more imperative.
"I see a tremendous number of similarities between now and 1987–soaring deficits, rising inflation, rising rates and a new Fed chairman," she notes.
The combination of expanding structural deficits, rising defense spending and the reversal of supply-side reform will damage productivity and investor return over time.
The Aug. 19 Congressional Budget Office report (The Federal Debt and Risk of a Fiscal Crisis) predicts $23 trillion in debt by 2020 and deficits rising from the $1 trillion mark to $2 trillion.
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