Restoring America's Fiscal Constitution.

• Author: Salsman, Richard M.
• Position: Book review

* Restoring America's Fiscal Constitution

By John D. Merryfield and Barry W. Poulson

Lanham, Md.: Lexington Books, 2017.

Pp. xii, 241. $100 cloth.

Mark Twain once quipped that he was tired of New Englanders complaining endlessly about the weather but doing nothing about it. The same could be said of fiscal worrywarts who warn endlessly about chronic deficit spending, mounting public debts, and "imminent" default but offer no remedies.

No such charge can be lodged against Professors John D. Merryfield and Barry W. Poulson, who give a fine account of recent global policy experience with various fiscal rules (especially "debt brakes") and then provide a detailed econometric simulation demonstrating how the United States today would be better off fiscally had it adopted a few simple fiscal rules beginning two decades ago. Federal debt now would be about $10 trillion--only 54 percent of gross domestic product (GDP) instead of 105 percent. Federal outlays would now represent 19 percent of GDP instead of 24 percent, helped in part by faster economic growth. The coauthors, convinced that U.S. bankruptcy is nigh, nonetheless say a fix is still possible--if we alter the U.S. Constitution.

The book's first chapter is its weakest, but thereafter the volume improves quickly and considerably. The authors begin with the supposed "theoretical foundations" of America's "fiscal constitution" (p. 1) but without defining the latter (it is, they hint, "unwritten" [p. xiii]). Next come accurate but meandering accounts of Keynesianism, monetarism, the thesis of "Ricardian equivalence" (that public spending detracts from the economy, regardless of how financed), political-manipulated business cycles, and the median-voter theorem. These topics are interesting, but none is shown to bear directly on the book's theme: that America is in fiscal peril but can be rescued if it wishes to be. The authors also baldly and mistakenly presume that electorates are more fiscally conservative than the politicians they elect and more so even than efficiency-focused public-finance experts and practitioners. Blaming chronic fiscal imbalances on political elites, they insist that fiscal rectitude would be the norm if only we had a more direct democracy, with citizens voting on fiscal policies through ballot-based referenda and plebiscites.

In this respect, the authors declare themselves to be more Jeffersonian than Hamiltonian, which is fitting to the extent that they are fans of...