Abstract
In a speech before the Mont Pelerin Society, William E. Simon recommended that the U.S. government adopt five rules to achieve stability and economic growth. Two of these rules deal with the budget posture. The rules were based upon Simon's belief that excessive government spending and recurring federal budget deficits significantly contributed to the economic instabilities of the 1970s and 1980s, namely, high inflation, high unemployment, and decreasing rates of production and private capital accumulation. This paper seeks to explore the extent to which fiscal action in these two decades had departed from Simon's recommendations and presents evidence on the link between federal budget deficits and economic growth.
“The proposals to limit spending and balance the budget are sometimes discussed as alternatives, but in my mind, they are not.”
William E. Simon. Speech before the Mont Pelerin Society. Hoover Institution, 1980, p. 30.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
References
Budget of the United States Government, Fiscal Year 2001.
De Leeuw, Frank; Holloway, Thomas M. “Cyclical Adjustment of the Federal Budget and Federal Debt,”Survey of Current Business, 63, December, 1983, pp. 25–41.
Economic Report of the President, 1983.
Economic Report of the President, 2001.
Holloway, Thomas M. “The Economy and the Federal Budget: Guides to the Automatic Effects,”Survey of Current Business, 64, July, 1984, pp. 102–105.
Hyman, David.Public Finance: A Contemporary Application of Theory to Policy, New York, NY: Harcourt College Publishers, 2002.
Mishkin, Frederic S.The Economics of Money, Banking, and Financial Markets, 4th ed., New York, NY: Harper Collins College Publishers, 1995.
Ott, Attiat F. “Taxing, Spending and the Federal Budget,”West Tax Review, 4, 1, 1983(a), pp. 41–71.
—— “Controlling Government Spending,” in Wm. Craig Stubblebine and Thomas D. Willett, eds.,Reaganomics: A Midterm Report, San Francisco, CA: ICS Press, 1983(b).
——Public Sector Budgets: A Comparative Study, Aldershot, UK: Edward Elgar Publishing Limited, 1993.
Pechman, Joseph, ed.Setting National Priorities: The 1984 Budget, Washington, DC: The Brookings Institution, 1983.
Simon, William E.A Time For Truth, New York, NY: Reader's Digest Press, McGraw-Hill Book Company, 1978.
--. “Do Conservative Governments Make a Difference in Monetary Policy?,” Speech Prepared for the Mont Pelerin Society, Hoover Institution, 1980.
Survey of Current Business, August 1983.
Author information
Authors and Affiliations
Rights and permissions
About this article
Cite this article
Orcutt, B.L. Expenditure and deficit policy: An analysis of the William E. Simon's rules. Atlantic Economic Journal 31, 219–232 (2003). https://doi.org/10.1007/BF02298816
Issue Date:
DOI: https://doi.org/10.1007/BF02298816