Tags: Feldstein | Economic | Stalemate | end

Harvard's Feldstein: U.S. Economic Stalemate Must End

Thursday, 27 Oct 2011 08:21 AM

Republicans and Democrats must each give ground to address budget deficits and rising debt burdens if they are serious about fixing the economy, says Harvard economist Martin Feldstein.

"The United States appears trapped in a dangerous economic stalemate. The refusal by both Republicans and Democrats to give ground on the budget is preventing the government from dealing with its massive fiscal deficit and rapidly rising national debt," Feldstein writes in a Project Syndicate Column.

Democrats refuse to budge on revamping entitlement programs like Medicare or Social Security while Republicans staunchly oppose tax hikes.
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One way to solve the problem could call for spending cuts accompanied by reducing tax expenditures, which are special tax code features that subsidize health care, mortgage borrowing, local-government taxes.

"Limiting tax expenditures could reduce the annual deficit by as much as 2 percent of GDP, thereby reducing the debt-to-GDP ratio in 2021 by more than 25 percentage points," Feldstein writes.

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Martin Feldstein
(Associated Press photo)
Either way, the standoff will end, Feldstein adds.

"I am optimistic that the stalemate will end after the election. At that point, both Republicans and Democrats will be able to accept reforms that they must reject now."

A Super Committee of congressional Democrats and Republicans is working to find ways to trim the country's gaping deficits.

Reports are surfacing that Democrats are proposing to shave $3 trillion off budget deficits via tax hikes and spending cuts, Reuters reports.

A congressional aide tells Reuters that Senator Jon Kyl, a super committee Republican, felt the Democratic plan relies too much on raising government revenue.

"We haven't signed off on any revenues, and we certainly aren't doing anything that high," the aide quoted Kyl as saying.

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Republicans and Democrats must each give ground to address budget deficits and rising debt burdens if they are serious about fixing the economy, says Harvard economist Martin Feldstein. The United States appears trapped in a dangerous economic stalemate. The refusal by...
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2011-21-27
Thursday, 27 Oct 2011 08:21 AM
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