Principles and Guidelines for Deficit Reduction

By Joseph Stiglitz |

Download the paper (PDF) by Joseph E. Stiglitz

This paper outlines proposals which should reduce the deficit by more than the goal of $4 trillion, increase growth, reduce the deficit/GDP ratio, and put the country on a more sustainable path. It offers an enunciated set of criteria against which we can judge the framework of shared sacrifice proposed by the Fiscal Commission.

Key Findings:

  • Deficit reduction is not an end in itself, but a means to other objectives.
  • Spending that increases debt but simultaneously (over the long run) increases GDP can lower the debt-to-GDP ratio.
  • Proposals from the Fiscal Commission Chairmen will lead to a less progressive tax system and a more divided society.
  • Deficit reduction goals must not be achieved on the backs of the less politically powerful or sacrifice the national interest to special interest groups.

Read “Principles and Guidelines for Deficit Reduction,” by Roosevelt Institute Senior Fellow Joseph E. Stiglitz.

Joseph E. Stiglitz is Senior Fellow and Chief Economist at the Roosevelt Institute and a professor at Columbia University. A recipient of the Nobel Memorial Prize in Economic Sciences (2001) and the John Bates Clark Medal (1979), he is a former senior vice president and chief economist of the World Bank and a former member and chairman of the (US president’s) Council of Economic Advisers.