New book edited by Rice economists examines pathways to fiscal reform in US

A new book edited by economists at Rice University explores fiscal problems faced in the United States and draws on research from leading economists to propose solutions.

“Pathways to Fiscal Reform in the United States” (MIT Press) examines what co-editors George Zodrow and John Diamond call the “unsustainable path” of current fiscal policy. Zodrow is the Allyn R. and Gladys M. Cline Chair of Economics at Rice and a scholar at Rice’s Baker Institute for Public Policy. Diamond is the Edward A. and Hermena Hancock Kelly Fellow in Public Finance at the Baker Institute.

“In the absence of corrective fiscal policies, federal deficits and debt relative to gross domestic product will continue to increase if something is not done to tackle these issues,” Diamond said.

In the book, numerous internationally recognized experts consider possible fiscal reforms aimed at addressing the debt problem; they focus on entitlement programs, budgetary issues and processes, and individual and corporate income tax reform.

“A central message of the book is that any solution must involve a multifaceted approach,” Zodrow said. “Rather than simply focusing on taxes, entitlements or debt management, elected officials must focus simultaneously on all three of these issues.”

The contributors address such topics as the intersection of rising health care costs and the level of federal expenses; alternate methods for evaluating the fiscal health and sustainability of Social Security; the efficacy of budgetary constraints, such as balanced budget amendments and debt ceilings, drawing on the experience with such provisions in the states; the effects of alternative methods of financing the national debt; an evaluation of several methods of limiting individual tax expenditures; various approaches to reforming the corporate income tax; and the economic effects of traditional base-broadening, rate-reducing corporate income tax reforms.

Ultimately, Zodrow and Diamond hope the book will help accomplish something that has thus far proved incredibly elusive – finding economically sound and politically feasible pathways to fiscal reform in the United States.

For more information on the book, visit http://mitpress.mit.edu/books/pathways-fiscal-reform-united-states.