The deficit conundrum

While there is disagreement on whether deficits are good or bad, depending upon which political economist one talks to, there is considerable unanimity in worrying about the extent of the current U.S. budget deficit. However, the discussion appears to be muddled. To highlight the confusion, this paper synthesizes some of the existing evidence, tests the veracity of conventional wisdom, makes a critical assessment of Gramm-Rudman-Hollings law, dwells on the politics involved, and suggests that uniform accounting measures be used so that the issue is better understood. It also raises some questions that need properly be addressed and suggests activism by the electorate demanding fiscal integrity among the politicians.