Government Debt

Jim DeMint is president and Robert Rector is a senior research fellow at the Heritage Foundation . The economist Milton Friedman warned that the United States cannot have open borders and an extensive welfare state. He was right, and his reasoning extends to amnesty for the more than 11 million unlawful immigrants in this country. In addition to being unfair to those who follow the law and encouraging more unlawful immigration in the future, amnesty has a substantial price tag. An exhaustive study by the Heritage...

FRANKFURT, Germany — The tiny Baltic state of Latvia has won approval to become the 18th member of the troubled euro currency union — despite doubts among many of its people and international concerns about its banking system. European Union officials said Latvia's willingness to join next year is a vote of confidence for the shared currency. At the moment, the 17-strong group of EU countries that use the euro is struggling with a crisis over too much government debt, a stubborn recession, and 12.2...

FRANKFURT, Germany — The European Central Bank's emergency efforts to address the continent's debt crisis represent a highly un­or­tho­dox leap into politics and an exceptional foray into the financial markets. But while these steps in recent weeks have helped keep the continent's crisis at bay, in particular by keeping borrowing costs for several large countries under control, the central bank has not been able to put the European economy on a sounder footing, according to analysts and government officials.

RALEIGH, N.C. — Backed by throngs of chanting supporters, dozens of liberal demonstrators are subjecting themselves to arrest each Monday at the state legislature here to protest a flurry of bills that could transform North Carolina into a model of conservative governance. The state's hard turn to the right comes less than five years after people took to the streets here to celebrate the 2008 victory of Barack Obama, the first Democratic presidential candidate to capture the state since Jimmy Carter in 1976.

BERLIN — As investors dumped stocks Friday on both sides of the Atlantic, a growing suspicion that Europe's banks are on shaky ground offered more evidence that the struggling global economic recovery is in trouble. The increasing mistrust of Europe's banks is threatening to drag down the continent's already sluggish economy and prompting new worries for American financial firms that do business with their European counterparts. The concerns about the health of Europe's financial firms...

Standard & Poor's announced Friday night that it has downgraded the U.S. credit rating for the first time, dealing a symbolic blow to the world's economic superpower in what was a sharply worded critique of the American political system. Lowering the nation's rating to one notch below AAA , the credit rating company said "political brinkmanship" in the debate over the debt had made the U.S. government's ability to manage its finances "less stable, less effective and less predictable.

RALEIGH, N.C. — Backed by throngs of chanting supporters, dozens of liberal demonstrators are subjecting themselves to arrest each Monday at the state legislature here to protest a flurry of bills that could transform North Carolina into a model of conservative governance. The state's hard turn to the right comes less than five years after people took to the streets here to celebrate the 2008 victory of Barack Obama, the first Democratic presidential candidate to capture the state since...

The regulatory, administrative state, which progressives champion, is generally a servant of the strong, for two reasons. It responds to financially powerful and politically sophisticated factions. And it encourages rent-seekers to exploit opportunities for concentrated benefits and dispersed costs (e.g., agriculture subsidies confer sums on large agribusinesses by imposing small costs on 316 million Americans). Such government inevitably means executive government and the derogation of the legislative...

The May 4 Business article " Shift in economy delays recovery " confirmed that demand is the real engine of growth. The finding also undermines the recent, fallacious argument that debt reduction is a precursor to growth. Businesses don't spring to action upon anticipating changes in the climate, be they at the microeconomic level, such as lower interest rates and reduced taxes, or the macroeconomic level, such as lower government debt and a...

An insistent question of our time is, how much government debt is too much. Is there some debt level that becomes crushing as opposed to merely costly? The controversy over research by economists Carmen Reinhart and Kenneth Rogoff shows how explosive the issue is. They suggested that debt exceeding 90 percent of a country's economy (gross domestic product, or GDP) corresponds to a sharp drop in economic growth. But their work is being challenged by three other economists , who say that Reinhart and Rogoff made basic errors that invalidate their...

The May 4 Business article " Shift in economy delays recovery " confirmed that demand is the real engine of growth. The finding also undermines the recent, fallacious argument that debt reduction is a precursor to growth. Businesses don't spring to action upon anticipating changes in the climate, be they at the microeconomic level, such as lower interest rates and reduced taxes, or the macroeconomic level, such as lower government debt and a...

Jim DeMint is president and Robert Rector is a senior research fellow at the Heritage Foundation . The economist Milton Friedman warned that the United States cannot have open borders and an extensive welfare state. He was right, and his reasoning extends to amnesty for the more than 11 million unlawful immigrants in this country. In addition to being unfair to those who follow the law and encouraging more unlawful immigration in the future, amnesty has a substantial price tag. An exhaustive study by the Heritage...

For most Americans, Europe is out of sight and out of mind. We figure that the worst of its debt crisis has passed. Italy has a new government. To mute social unrest, some countries are slightly relaxing austerity policies. The European Central Bank (ECB) has stabilized the bond market for weak debtor countries. Despite problems, Europe is muddling through. Be skeptical — very skeptical. That's the main takeaway from a talk Wednesday by economist Hans-Werner Sinn at the Peterson Institute for International Economics,...

An insistent question of our time is, how much government debt is too much. Is there some debt level that becomes crushing as opposed to merely costly? The controversy over research by economists Carmen Reinhart and Kenneth Rogoff shows how explosive the issue is. They suggested that debt exceeding 90 percent of a country's economy (gross domestic product, or GDP) corresponds to a sharp drop in economic growth. But their work is being challenged by three other economists , who say that Reinhart and Rogoff made basic errors that...

THE LAST WEEK has been rough for Kenneth Rogoff and Carmen Reinhart, too. The Harvard economists, celebrated for their work on financial crises, stand accused of analytical errors — the correction of which debunks their famous 2010 finding that a national debt-to-gross domestic product ratio above 90 percent may substantially retard economic growth. The Rogoff-Reinhart goof was no harmless error, the critics charge, but the intellectual trigger for spending cuts and...

The regulatory, administrative state, which progressives champion, is generally a servant of the strong, for two reasons. It responds to financially powerful and politically sophisticated factions. And it encourages rent-seekers to exploit opportunities for concentrated benefits and dispersed costs (e.g., agriculture subsidies confer sums on large agribusinesses by imposing small costs on 316 million Americans). Such government inevitably means executive government and the derogation of the legislative branch,...

Amid all the grim economic news from Europe, it's worth noting that there are also some success stories. Well, of course, you say: Germany. Okay. But there's another conspicuous candidate, and it might seem surprising: Sweden. To many Americans, Sweden is a bloated, inefficient welfare state. But the reality and the stereotype don't match. Look at the record. Sweden's job growth (as a percentage) rivals Germany's since 2006; present unemployment at 7.5 percent is low among advanced economies; inflation averages about 2 percent;...

Welcome to the next chapter of the endless debt debate. The release of a Congressional Budget Office report on the next 10 years of the U.S. economy ends a brief lull in Washington. As we return once again to our regularly scheduled program of "Crisis and Impasse," let's take a moment to consider the following heretical idea: We have no debt problem. We have spent years demonizing debt, and now have an entire political movement dedicated to the proposition that government debt will destroy America as we know it...

Tens of thousands mourned former British prime minister Margaret Thatcher at her ceremonial funeral in London Wednesday. Meanwhile, protesters elsewhere celebrated Thatcher's death by burning effigies . Keep reading for views on Thatcher and her legacy from British writers. The Economist | Freedom fighter Her reforms, it is said, sowed the seeds of the recent economic crisis. Without Thatcherism, the big bang would not have happened. Financial services would not make up such a large slice of the British...

Japan plans to flood its economy with freshly printed yen in coming months in an effort to shock one of the world's major industrial powers out of a 20-year-old stupor. The impact of an unexpectedly ambitious move by the Bank of Japan on Thursday could course quickly through the world economy, pulling down the value of Japan's currency and with it the prices of the cars, electronics and other goods the country sells worldwide. That could mean a larger U.S. trade deficit with...