Reckless Disregard: The Bush Administration\u27s Policy of Cutting Taxes in the Face of an Enormous Fiscal Gap

The Bush administration\u27s policy of sharply cutting taxes while increasing government spending is both misguided and harmful. Presumably rationalized in private as a way of shrinking government over the long term without paying a current political price, this policy in fact increases the government\u27s distributional intervention by handing money to current voters at the expense of younger and future generations. Moreover, the ballooning fiscal gap may lead to an Argentina-style meltdown in the U.S. government\u27s position as a borrower in world capital markets, potentially yielding chronic inflation, unemployment, and bank and currency crises that may affect our economic productivity for an indefinite period

The Economics of Vouchers

This paper aims to provide a swift tour of the economic issues presented by vouchers and thus to fill an apparent gap in the literature for a basic survey of the subject. Among the issues it considers are: factors determining a voucher's cash-equivalence; reasons (such as paternalism, externalities, and distribution) for giving beneficiaries non-cash-equivalent vouchers rather than cash; optimal tax issues involved in the design of vouchers and the choice between vouchers and other delivery mechanisms, including factors determining the optimal marginal reimbursement rate (MRR) in a voucher program, and the similarity between this question and that of determining optimal marginal tax rates (MTRs) under the income tax; the incentive effects of voucher eligibility criteria, such as income or asset tests; factors determining the allocative and price effects of vouchers, both in the short run when unexpectedly enacted and at equilibrium; and factors relevant to the choice between private and public supply that may often overlap with the decision whether to adopt a voucher program.