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American Democracy and the Problem of Fiscal Deficits

Author

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  • Richard E. Wagner

    (Harris Professor of Economics, George Mason University)

Abstract

Most theorists of public finance treat budgeting as a technical problem centered on projecting revenues and expenses. In contrast, I treat budgeting as a political problem, with technical matters serving to obscure more than illuminate that problem. This essay starts by explaining why persistent budget deficits have little to do with technical matters because they mostly reflect the conflictual character of contemporary political economy. The rest of the essay probes this conflictual character by providing a conceptual framework grounded in the inherently complex character of fiscal systems, and with this complex character contrasting sharply with the image of simplicity advanced by most theorists of public finance. The key point I advance is that democratic budgeting, especially in large national governments, will more likely operate as a source of turbulence than as a source of systemic stability.

Suggested Citation

  • Richard E. Wagner, 2019. "American Democracy and the Problem of Fiscal Deficits," Public Policy Review, Policy Research Institute, Ministry of Finance Japan, vol. 15(2), pages 199-216, December.
    • Handle: RePEc:mof:journl:ppr15_02_02
    as

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    References listed on IDEAS

    as
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    5. Wagner,Richard E., 2019. "Public Debt as a Form of Public Finance," Cambridge Books, Cambridge University Press, number 9781108735896, November.
    6. Primo, David M., 2007. "Rules and Restraint," University of Chicago Press Economics Books, University of Chicago Press, number 9780226682594, June.
    7. Anthony Downs, 1957. "An Economic Theory of Political Action in a Democracy," Journal of Political Economy, University of Chicago Press, vol. 65(2), pages 135-135.
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    More about this item

    Keywords

    budgetary process; public debt; parasitical politics; Image creation; non-logical action; emergence vs. axiomatics;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H61 - Public Economics - - National Budget, Deficit, and Debt - - - Budget; Budget Systems
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State

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