American Fiscal Policy in the 1990's

This essay analyzes current fiscal policy in the United States within an historical context. The objective is to clarify why recent developments in the United States are troubling, but also to understand why the United States, in contrast to other countries such as Italy, has so far avoided the path to fiscal disaster. The discussion suggests that perhaps the American public understands, at least implicitly, that unless fiscal policy limits the growth of the public debt, the government's credit is sure to run out at some unpredictable future time, as has happened in Italy, with the consequent need for drastic and painful fiscal adjustments.