America's Fiscal Constitution: Its Triumph and Collapse.

• Author: Abrams, Burton A.
• Position: Book review

America's Fiscal Constitution: Its Triumph and Collapse

By Bill White

New York: Public Affairs, 2014.

Pp. xi, 557. $35 paperback.

Bill White is a former three-term mayor of Houston who lost the Texas gubernatorial election to Rick Perry in 2010. The book jacket identifies him as a "fiscally conservative politician" and a Democrat by party. His educational background includes an undergraduate degree in economics from Harvard University and a law degree from the University of Texas. Since his loss to Rick Perry, he obviously has been busy writing a detailed economic and political history of American fiscal policy with an emphasis on deficit finance. The book is loaded with relevant history, humorous anecdotes, and thirty-eight pages of interesting tables on debt. I found the book informative but somewhat frustrating at the same time due to its omissions and incorrect assessments.

The book provides an interesting look at American fiscal policy through time and gives insights into the behavior and attitudes of presidents and their appointees. I think White is spot on in identifying the costs of the rapidly rising public debt and why we need reforms. I think he is weakest in identifying the cause of our new fiscal constitution and the appropriate remedies needed to correct the situation.

White identifies what he calls America's "unwritten fiscal constitution" that for most of U.S. history received widespread support from all major political parties. It consisted of four generally accepted reasons for deficits: borrowing to preserve the union, borrowing to expand and connect the nation's borders, borrowing to wage war, and borrowing during severe downturns. He identifies four pillars that reinforced the unwritten fiscal constitution: clear accounting, "pay-as-you-go" budget planning, the establishment of trust funds financed entirely with dedicated revenues, and explicit congressional approval of debt for specific amounts and purposes.

After reviewing history that shows how the pillars supported the unwritten fiscal constitution, White argues that the nature of fiscal budgeting changed after 2000. Never before had the government waged a prolonged war without raising taxes, financed a vast new entitlement program entirely with debt, substituted federal debt for payroll contributions supporting Social Security, and had members of both parties claiming that balancing the budget in normal economic conditions would damage the nation's long-term...