Facing a $1.6 trillion deficit, President Obama creates the National Commission on Fiscal Responsibility and Reform.
Facing a $260 billion deficit, President Clinton appoints a Bipartisan Commission on Entitlement and Tax Reform.
The commission’s recommendations (which were not implemented):
From the Washington Post (August 12):
“Olympic Antidote for Government Gridlock” (by David S. Broder)
The Olympics were in Michigan and the gridlock was primarily about diminishing the deficit.
Worried about a deficit that exceeded $200 billion, Congress passes the Balanced Budget and Emergency Control Act of 1985. Also called the Gramm-Rudman-Hollings Act, this law targeted FY 1993 as the year the deficit would be eliminated.
The Economic Life
The turning point was probably the mid 1930s when politicians and economists starting thinking about balancing the economy instead of balancing the budget. Validation was presented by economist John Maynard Keynes whose General Theory of Employment, Interest, and Money was published in 1936. In his book, disagreeing with Adam Smith, Keynes said that because an economy in decline could remain there, the government should use deficit spending to “prime the pump”.