EDWARD D. KLEINBARD, professor of law, USC’s Gould School of Law.
This op-ed originally appeared at CNN on Nov. 30.
America’s fiscal policy faces an apparent Hobson’s choice. On the one hand, we need to tame federal deficit spending by imposing new across-the-board spending cuts and higher taxes. We are told that if we do not act on this soon, the debt markets will choke on the overabundance of government debt issued to fund those deficits, causing interest rates to climb. As a result, businesses and homeowners will be unable to borrow on reasonable terms, which will lead to a slowdown of the economy.