Friday, January 21, 2011

How To Cut the Deficit

I like Mankiw because he thinks up an interesting (ironic) analogy when he talks about difficult economic issues;

Plan to reduce the budget deficit: the federal government writes me(=health care) a check for $1 billion and increases the tax(=for fiscal sustainability) by $3 billion. This means that giving me that $1 billion will reduce the budget deficit by $2 billion.

This is not about the fiscal problem that America has, but that Japan has:

Plan to reduce the budget deficit: the federal government writes me(=child care) a check for 1 billion¥ and increases the consumption tax(=for fiscal sustainability) by 3 billion¥.

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