Fiscal cliff lessons from the '30s

During the Great Depression it was deficit spending that rescued the US. Today, it's quite possible the one thing Washington can agree on – that reducing debt is the number one economic objective – is a mistake.

Instead, a program of indiscriminate spending cuts and tax concession abolitions was passed, as a 'Sword of Damocles' that would drop on America’s collective head if Congress could not reach a compromise by the end of 2012.

So unless a deal is bartered by December 31, a set of tax increases and across-the-board cuts in government expenditure will reduce net government spending by about $500 billion, or roughly 3 per cent of GDP.

{{content.question}}

SMS Code Sent…

Hi {{ user.FirstName }}

Looks like you've already taken a free trial

Please enter your payment details

We have sent you a code via SMS to {{user.DayPhone}}

please enter this code below to activate your membership

If you didn't receive SMS code please

Looks you are already a member. Please enter your password to proceed

Please untick this box when using a public or shared device


Verify your mobile number to unlock a FREE trial

Please sign up for full access

Updating information

Please wait ...

  • Mastercard
  • Visa

Related Articles