Corporate Taxes and the Federal Deficit

Authors

  • Craig Medlen

DOI:

https://doi.org/10.14452/MR-036-06-1984-10_2

Keywords:

Political Economy

Abstract

In the business press, the federal deficit is issue number one. Warnings by Wall Street economists, presidential advisers, and other economic experts are everywhere. Most agree that the $180-billion deficit this year is holding interest rates up and that the even larger projected future deficits contain the danger of a rapid run-up in rates. They argue that in a debt-logged system, such an increase in interest rates would threaten to "crowd out" new capital expenditures directly through a reduction in profits and indirectly by slowing up new purchases of houses and consumer durables. Their concern is understandable, given the already high level of bankruptcies, foreclosures, third-world debt reschedulings, and trade deficits that could only get worse if rates were to increase. While rapidly increasing the money stock might ward off such a scenario, the economists warn of the specter of renewed inflation and question whether such a counteracting measure would be worth the price.

Published

1984-11-02

Issue

Section

Articles

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