Government Spending

Nothing is more contentious in politics than the bottom line.

Posted on March 20, 2025 in Hot Topic

book covers

Alesina, Alberto. Austerity: when it works and when it doesn’t. Princeton, 2019. 276p bibl index ISBN 9780691172217, $35.00; ISBN 9780691185019 ebook, contact publisher for price.
Reviewed in CHOICE July 2019

Governments often spend more than they take in through tax revenue, resulting in short-term deficits and long-term debt. Traditional economic theory suggests that deficits should occur during downturns in the business cycle and that in times of prosperity, governments should realize budget surpluses, which can pay down debt. When debt accumulates, the policy option put on the table is “austerity,” which means cutting government spending and/or increasing taxes. The authors explain that those two approaches have different implications and that austerity through spending cuts is likely to result in less economic loss in the types of economies studied. The book is an important contribution to work in this area because of the large data set employed in the study and a methodology that looks at multiyear fiscal plans. The authors argue that an austerity policy is not always the “kiss of death” for governments. This reviewer appreciated that the book was organized in a way that makes it approachable for non-technical readers and a valuable resource for more technical readers. This flexibility adds to its usefulness in advanced undergraduate as well as graduate courses. The authors also lay foundations for future research on countries not examined in their study. Summing Up: Recommended. Upper-division undergraduates through faculty. —M. H. Lesser, Lenoir-Rhyne University

Bartlett, Bruce. The new American economy: the failure of Reaganomics and a new way forward. Palgrave Macmillan, 2009. 266p ISBN 9780230615878, $28.00.
Reviewed in CHOICE July 2010

Bartlett, who was at the center of the supply-side economic revolution of the Reagan years, broke with the conventional conservatives during the administration of George W. Bush. His concern at the time was the irresponsible expansion of the federal deficit through excessive tax cuts. Once the economic crisis hit in 2007, Bartlett had the good sense to realize that further tax cuts and monetary policies would be ineffectual in stimulating the economy. The core problem was aggregate demand. Bartlett makes his case by reviewing the respective political, economic, and ideological history of both the Great Depression and the recent crisis to show why extra government spending is needed under such circumstances–a position that leaves Bartlett at odds with his fellow conservatives. Bartlett’s key economic proposal is the introduction of a value-added tax, which would be capable of raising considerable revenue. Of course, the burden of this tax would fall on ordinary people while leaving most of the wealthy relatively unscathed. This book is timely, well written, and informative. Summing Up: Recommended. Public and academic library collections, lower-division undergraduate and up. —M. Perelman, California State University, Chico

Ippolito, Dennis S. Deficit politics in the United States: taxes, spending and fiscal disconnect. Routledge, 2022. 236p bibl index ISBN 9780367765064, $160.00; ISBN 9781003167266 ebook, $48.95.
Reviewed in CHOICE April 2023

Ippolito (Southern Methodist Univ.) provides an exceptionally detailed account of the political debates over US fiscal policy from the nation’s founding to the Trump era. As the title implies, the book weaves together the political and economic history of the United States. Ippolito reminds readers that an aversion to public debt characterized the first 150 years of US history. Unprecedented deficits since then—caused by low taxes and high spending—were grudgingly accepted and budget surpluses became rare. Ippolito emphasizes that a seemingly permanent bipartisan consensus—that debt should finance increases in public spending—now controls fiscal policy. The result is that “voters need not decide how big a government they are willing to pay for.” Ippolito augments the narrative with well-placed tables derived from primary sources and presented in a style and format that are consistent regardless of the period covered or the specific policy context examined. Social historians, political scientists, economists, and public policy scholars will want to keep this volume handy for its historical context, vital for any number of scholarly purposes. Summing Up: Highly recommended. Advanced undergraduates through faculty. —J. E. Herbel, Kennesaw State University

Kleinbard, Edward D. We are better than this: how government should spend our money. Oxford, 2015. 509p bibl index afp ISBN 9780199332243, $29.95.
Reviewed in CHOICE March 2015

This book focuses on Kleinbard’s value judgments concerning fiscal policy; specifically, it centers on his opinions about government taxation and spending policies.  Kleinbard’s decidedly progressive bent is reflected in the book’s title—a reference to the implementation of conservative economic policies beginning with President Reagan’s tax cuts and continuing with the rise of the Tea Party in the last few years.  Under these policies, which embrace limited governmental intervention in the economy, the distribution of income and wealth in this country has become much more unequal.  Kleinbard (Univ. of Southern California) refutes neoliberal and libertarian arguments for limited government spending by citing the ways that the government could spend on nutrition, education, and health care programs.  He argues that the benefits to society from such investments would far exceed the costs.  To bolster his argument, Kleinbard compares US tax rates and public spending on health care and education to those of other industrialized countries.  A second book on this same topic that has a similarly progressive orientation but is less technical is Garrison Keillor’s Homegrown Democrat (2004).  Kleinbard’s book should be required reading for all elected officials. Summing Up: Highly recommended. Upper-division undergraduates and above. —E. P. Hoffman, Western Michigan University

Kotlikoff, Laurence J. The coming generational storm: what you need to know about America’s economic future, by Laurence J. Kotlikoff and Scott Burns. MIT, 2004. 274p ISBN 0262112868, $27.95.
Reviewed in CHOICE September 2004

Economist Kotlikoff (Boston Univ.) and journalist Burns warn readers not to expect the US economy to continue systematically translating technological progress into rising standards of living. They explain that in recent generations politicians have made unsustainable promises about government spending on retirement programs and medical care–creating a gap between spending and revenue of a mind-numbing $45 trillion (not a typo)–and that the looming retirement of baby boomers means the next generation will face a doubling of lifetime net tax rates unless citizens make very large sacrifices very soon. They relentlessly explain why standard remedies will not fix the problem, why their own innovative, yet sensible, proposal is not likely to be adopted by selfish voters, and why continuing along the current path could easily drag the economy into a torpor replete with stultifying taxes, resurgent inflation, and capital flight. The authors close with investment advice to help individuals weather the storm. Kotlikoff’s talents as a pioneer of generational accounting are joined with Burns’s engaging (though occasionally flippant) prose to make the book accessible to almost any reader. This may be the year’s most important book. Summing Up: Essential. All library collections. —R. M. Whaples, Wake Forest University

Lipsmeyer, Christine S. The politics of budgets: getting a piece of the pie, by Christine S. Lipsmeyer, Andrew Q. Philips, and Guy D. Whitten. Cambridge, 2023. 300p bibl index ISBN 9781107179318, $105.00; ISBN 9781316631287 pbk, $34.99; ISBN 9781316845981 ebook, contact publisher for price.
Reviewed in CHOICE November 2023

Research on public budgets typically focuses too narrowly on a single policy or assumes that budget elements operate independently of one another. Concerned with these limitations, the authors adopt in this book a more holistic approach that highlights interrelationships among key budgetary variables. The result is a picture of budgeting that reflects its zero-sum nature and places ideological competition for budget priorities in a more realistic context. The book shows how increasing spending in one area pushes out funding for increased spending in other areas. This seems to be common sense, but it is a truism that the authors show to be repeatedly missing in other research. At the same time, they show that budget components such as expenditures, spending, deficits, and volatility are interconnected and not purely exogenous variables. Extensively referenced, the book showcases numerous models for more reliable ways of predicting budget changes. Inattentive readers and those without a background in economics and political science will find some chapters difficult to follow. But for those with such backgrounds, this book provides an indispensable source of inspiration for new research agendas. Summing Up: Highly recommended. Advanced undergraduates through faculty. —J. E. Herbel, Kennesaw State University

Schleicher, David. In a bad state: responding to state and local budget crises. Oxford, 2023. 248p bibl index ISBN 9780197629154, $29.95; ISBN 9780197629178 ebook, contact publisher for price.
Reviewed in CHOICE January 2024

Federal systems of government expect periodic, subnational fiscal crises. Their origins include systemic shortfalls, underinvestment, recessions, and poor decision-making. The responses over the course of American history generally fall into one of three categories: bailouts, forced debt repayment, and bankruptcies. Schleicher (law, Yale Univ.) provides engaging and clear case studies of past crises from the founding period through the COVID pandemic to highlight the inherent tradeoffs of each approach. The discussion of how the rise of railroads led to differences in how cities and states absorbed risks and debt is especially insightful. The heavy influence of courts, with contradictory precedents influencing current practice, is a fascinating theme. Schleicher uses historical analyses to lay the foundations for understanding and critiquing the multipronged approaches now characterizing crisis response. Refreshingly, he takes his expertise in historical context and the emerging drivers of fiscal crises to inform readers and call for feasible reforms. These reforms can minimize the prevalence of future crises and provide more effective, consistent responses. Highly recommended for public finance professionals, scholars, attorneys, elected officials, and legislative staff. Summing Up: Highly recommended. Advanced undergraduates through faculty; professionals. —M. L. Godwin, University of La Verne

Sidman, Andrew H. Pork barrel politics: how government spending determines elections in a polarized era. Columbia, 2019. 199p bibl index ISBN 9780231193580, $105.00; ISBN 9780231193597 pbk, $35.00; ISBN 9780231550406 ebook, $34.99.
Reviewed in CHOICE March 2020

Sidman (John Jay College of Criminal Justice, CUNY) has written a thought-provoking book on the role pork-barrel politics plays in elections. Political scientists have long been interested in the motivations and effects of bringing home the bacon, and now Sidman provides interesting new insights about the effects of pork-barrel spending on elections. The basic idea driving the book is that pork-barrel spending is an ideologically divisive issue in US politics, and that polarization plays a role in shaping its effect on a variety of dimensions of congressional elections, including primary competition, campaign spending, and even candidate vote share. For example, Sidman shows that such spending can deter challengers during primary elections. This is a book for anyone interested in federal spending, electoral politics, Congress, or political polarization. Summing Up: Recommended. Upper-division undergraduates through faculty. —A. Weinschenk, University of Wisconsin-Green Bay

Wessel, David. Red ink: inside the high-stakes politics of the federal budget. Crown Business, 2012. 204p ISBN 0770436145, $22.00; ISBN 9780770436148, $22.00.
Reviewed in CHOICE December 2012

Wessel is economics editor and a columnist for The Wall Street Journal, and author of In Fed We Trust (CH, Feb’10, 47-3294). In Red Ink, a small-format volume with five focused chapters, 150 pages of text (including a dozen unnumbered figures, and integrated vignettes of the familiar players–Lew, Panetta, Ryan, Romer, Elmendorf, Krugman), and 30 pages of endnotes, Wessel offers a valuable, attention-holding economic and political primer on government spending and taxation for an intelligent lay audience. Chapter 1 presents fleshed-out bullet points on jarring facts about federal spending and employment, taxes and taxpayers (overall and across the income spectrum), and deficits and their financing. Chapter 2 is a 70-year overview of federal budgets from FDR to “W” Bush. Chapters 3 and 4, respectively, treat contemporary spending issues such as health care, Social Security, and defense, and offer a tutorial on where tax revenues come from. The concluding chapter, “Why This Can’t Go On Forever,” is the weakest of the five; it is less informative and leaves the reader wishing for a closing flourish instead of a whimper. But book-jacket endorsements from the Left, Center, and Right mean it cannot be all bad–or perfect. Summing Up: Highly recommended. All levels of undergraduate students; professionals; general readers. —A. R. Sanderson, University of Chicago

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