Nervous economy watchers are eyeing the latest statistics on business investment, consumer spending, and net exports looking for signs of an economic slowdown. Some fear a recession may occur by the end of 2021. Whether a slowdown or recession, we will be in for a raucous debate over how best to proceed. What does fiscal responsibility compel when recession hits? With a national debt currently over $21 trillion, some pundits and pols will surely advocate for austerity policies, reducing government spending and working toward balanced budgets. Economists, on the other hand, will argue that fiscal responsibility requires a policy that will mitigate the length and severity of the recession; they support increasing government borrowing and spending to offset the decline in private sector spending. Should a large national debt change our recession-fighting strategy? In recessions, firms and households reduce spending in response to declines in demand and income; so, it is intuitively appealing to expect the government to likewise cut spending. Many will question whether, given the already large national debt, further deficit spending to fight the recession will make the nation poorer. Not necessarily: The answer to this important concern rests on how wisely the borrowed money is spent… Read full this story
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How can a high-debt nation fight the next recession? have 281 words, post on www.tampabay.com at September 6, 2019. This is cached page on xBlogs. If you want remove this page, please contact us.