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A New Chapter in U.S. Fiscal Policy

Featured Events | Feb 21, 2023 |

Throughout much of the United States’ financial history, the public has viewed government deficits as dangerous. Yet by the end of 2022 when the national debt peaked at $31.45 trillion, that sentiment seemed to have changed. What shifted the nation’s attitudes? Alan Blinder, PhD, a world-renowned economist, author, and Princeton University professor, quoted former Vice President Dick Cheney: “Reagan proved deficits don’t matter.”

Blinder guided readers through 60 years of American economic policy in his book, A Monetary and Fiscal History of the United States, 1961-2021, also the focus of this webinar sponsored by the Gabelli Center for Global Security Analysis, Museum of American Finance, and CFA Society of New York. The former vice chair of the U.S. Federal Reserve System and member of President Clinton’s Council of Economic Advisers pointed out how the sweeping highs and lows of contemporary policy led to record-breaking economic booms and recessions.

As of 2023, the federal interest rate rests between 4.5% and 4.75%. Many are concerned, as these are the highest numbers they have ever seen in their lifetime, but Blinder hesitated to refer to this moment in time as a “debt spiral.”

“A 4% treasury bond rate is not historically a high rate, but paying 4% is quite a lot,” Blinder said. “The interest burden in the federal budget is much higher than it has been for the last couple of years. I think we’re sort of right on the margin.”

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